Labor Legislation related to the tourism and hospitality industry in the Philippines

One must look into applicable related literature that serves as a foundation for seeking the best labor practices in the tourism-oriented sector. In the Philippines, let us review the different labor legislation affecting the hospitality and tourism industry.

A) The 1987 Constitution


The 1987 Constitution provides an explicit provision for labor.
Labor, whether local or overseas, organized or not organized, shall be given constitutional protection. The right to strike, although already a part of the right to self-organization, is specifically mentioned. The right to a living wage is expressly stated. A wage is a living wage if it is adequate to sustain a worker and his family in dignity.

The State shall promote shared responsibility between workers and employers. Thus, the workers shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law. In this regard, the law may provide for consultations with workers or their unions. The union which is the collective bargaining agent may be represented in the governing body of an enterprise whose opinion voicing that of the union he represents may be taken into account by management.

The recognition by the State of the right of labor to its just share in the fruits of production and the right of enterprises to reasonable returns on investments as well as to expansion and growth may be considered a sequel to the rule that the principle of shared responsibility between workers and employers must be promoted by the State. The words “just share in the fruits of production” should not cover only basic salaries and other employment benefits but may also cover profit-sharing.
The State also protects the rights of the working women by assuring them safe and healthful conditions of work and opportunities to maximize their full potential in the service of the nation.


B) Benefits, Privileges, Policies Affecting Employees


Minimum Wage

By virtue of Republic Act No. 6727 (Wage Rationalization Act), the determination of minimum wage rates are now within the function of the Regional Tripartite and Productivity Board. The concept of “minimum wage” means more than setting a floor wage to upgrade existing wages. “Minimum wages” underlies the effort of the State to promote productivity-improvement and gain-sharing measures to ensure a decent standard of living for the workers and their families; to affirm labor as a primary social economic force.

Collective Bargaining

This means conferring promptly and in good faith for negotiating agreements with respect to wages, hours of work, etc. and entering into written contracts, (called Collective Bargaining Agreement or CBA) adjustment of grievances, etc. The provisions commonly found in collective bargaining agreements are: 1) Enumeration or reservation of management rights; 2) Union recognition and security; 3) Wage and fringe benefits and their administration; 4) Physical working conditions; 5) Selected personnel management and plant operation practices; 6) Grievance and arbitration; 7) Duration of contract.


Labor Management Council

Under Article 255 of the Labor Code, it reserves the right of an individual employee or group of employees (unionized or non-unionized) to present grievances to their employer at any time, with or without collective bargaining, with or without exclusive bargaining representatives. The Department of Labor and Employment promotes the formation of Labor Management Councils (LMC) in organized and unorganized establishments. An LMC, either as council or committee, can serve as a forum where management and employees may air their concerns, short of collective bargaining. It is largely a communication mechanism which includes prevention or resolution of disputes. Harnessed to the fullest and given the sincerity, confidence and maturity of both sides, LMC can effectively secure industrial peace, provided it maintains its integrity. In fact, an LMC can be so effective it can make a labor union unnecessary. Labor Management Councils require that employee representatives should be elected by the employees, not hand-picked by management.

Maternity and Paternity Leaves

Maternity leave benefits are covered under Republic Act No. 8282 (May 1, 1997), also known as the Social Security Act of 1997. Under said law, a female member (need not be married) who has paid at least three (3) monthly contributions in the 12-month period immediately preceding the semester of her childbirth or miscarriage shall be paid a daily maternity benefit equivalent to 100% of her average daily salary credit for 60 days or 78 days in case of caesarian delivery, subject to the following conditions:

(a) That the employee shall have notified her employer of her pregnancy, and the probable date of her childbirth, which notice shall be transmitted to the SSS in accordance with its rules and regulations;

(b) The full payment shall be advanced by the employer within 30 days from the filing of the maternity leave application;

(c) That payment of daily maternity benefits shall be a bar to the recovery of sickness benefits provided under this Act for the same period for which daily maternity benefits have been received.

(d) That the maternity benefits provided under this Act shall be paid only for the first four (4) deliveries or miscarriages;

(e) That the SSS shall immediately reimburse the employer of 100% of the amount of maternity benefits advanced upon receipt of satisfactory proof of such payment and legality thereof; and

(f) That if an employee member should give birth or suffer miscarriage without the required contributions having been remitted for her by her employer to the SSS, or without the latter being previously notified by the employer of the time of pregnancy, the employer shall pay to the SSS damages equivalent to the benefits which said employee member would otherwise have been entitled to.
On the other hand, Republic Act No. 8187, also known as the Paternity Leave Act of 1996 governs the granting of paternity leave benefits to every married male employee. Under the said law, every married male employee in the private and public sector shall be entitled to a paternity leave of seven (7) days with full pay for the first four (4) deliveries of the legitimate spouses with whom he is cohabiting. The following conditions must be met in order to avail of paternity leave benefits:
(i) He is an employee at the time of delivery of his child;
(ii) He is cohabiting with his legitimate spouse at the time she gives birth or suffers a miscarriage;
(iii) He has applied for paternity leave in accordance with the Implementing Rules;
(iv) His wife has given birth or suffered a miscarriage.
Republic Act No. 8972 otherwise known as the Solo Parents’ Welfare Act of 2000 governs the granting of leave privileges to solo parents. In addition to leave privileges under existing laws, parental leave of not more than seven (7) days every year shall be granted to any solo parent employee who has rendered service for at least one (1) year.

Service Charges

The rule of service charges applies only to establishments collecting service charges such as hotels, restaurants, lodging houses, night clubs, cocktail lounge, massage clinics, bars, casinos, gambling houses and similar enterprises, including those entities operating primarily as private subsidiaries of the Government. All service charges collected by hotels, restaurants, and similar establishments shall be distributed at the rate of 85% percent for all covered employees and 15% percent for management. The share of employees shall be equally distributed among them. The 15% shall be for the disposition by management to answer for losses and breakages and distribution to managerial employees at the discretion of management in the latter case.

Employment Contracts

An employment contract is that by virtue of which one person (employee) binds himself with respect to another (employer) to place at the service of the latter his own efforts in work, and the latter in turn agrees to pay him a compensation proportional to the time or to the quantity of work done.

The concept of “employment contract” is regulated under the provisions of the Labor Code of the Philippines, Civil Code of the Philippines and other special laws. Execution of employment contracts are in line with the characteristics of autonomy of contracts wherein parties are free to stipulate terms and provisions in a contract, as long as these terms and provisions are not contrary to law, morals, good customs, public order and public policy. An employment contract is impressed with public interest. Hence other considerations of moral and social character have to be reckoned with to promote industrial peace and in keeping with social justice. Whenever there is doubt in the interpretation of any labor or employment contracts, the same shall be construed in favor of the safety and decent living for the laborer.

Legally speaking, a contract of employment is consensual in nature which does not require additional formalities for its validity. However, the current practice in labor intensive industries like the tourism industry is to utilize express written employment contracts, clearly understood and voluntarily agreed by the parties to protect the interest of both capital and labor. This is true especially for employees under a probationary, project, casual and fixed-term employment wherein the standards, scope and duration of the employment must be express, clearly understood and voluntarily agreed by the parties. It is a fair assumption to say that normal employees would comply with norms if they are properly and sufficiently informed. This communication process increases the extent of knowledge of each employee, expands the span of understanding of each employee and enhances the level of acceptance by each employee.

Death Benefits

Under the Social Security Law, upon the death of a member who has paid at least 36 monthly contributions prior to the semester of death, his primary beneficiaries shall be entitled to the monthly pension: Provided, that if he has no primary beneficiaries, his secondary beneficiaries shall be entitled to a lump sum benefit equivalent to 36 times the monthly pension. If he has not paid the required 36 monthly contributions, his primary and secondary beneficiaries shall be entitled to a lump sum benefit equivalent to the monthly pension times the number of monthly contributions paid to the SSS or 12 times the monthly pension, whichever is higher. A funeral grant equivalent to P12,000 shall be paid, in cash, or in kind, to help defray the cost of funeral expenses upon the death of a member, including permanently totally disabled member or retiree.

In case of work-related deaths, beneficiaries will receive death benefits under the Employees Compensation and State Insurance Fund, in addition to the benefits under the SSS Law. Accordingly, the amount under the Employees Compensation Fund shall be the amount equivalent to his monthly benefit, plus ten percent thereof for each dependent child, but not exceeding five. The Employees Compensation Commission has increased the funeral benefits to P10,000.

Health Benefits

This includes sickness, medical and hospitalization benefits. Under the Social Security Law, a member who has paid at least 3 monthly contributions in the 12-month period immediately preceding the semester of sickness or injury and is confined more than three (3) days in a hospital or elsewhere with the approval of the SSS, shall be paid a daily sickness benefit equivalent to 90% of his average daily salary credit.

In case of work-related sickness, the covered employee will be entitled to medical services, appliances and supplies, in addition to the benefits under the SSS Law.

Retirement

Under Article 287 of the Labor Code, as amended by Republic Act No. 7641, also known as The New Retirement Law, any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. In the absence of a retirement plan or agreement providing for retirement benefits of employees in establishments, an employee upon reaching the age of 60 years or more, but not beyond 65 years which is hereby declared the compulsory retirement age, who has served at least 5 years in the said establishment, may retire and shall be entitled to a retirement pay equivalent to at least ½ month salary for every year of service, a fraction of at least 6 months being considered as one whole year.


SSS, PhilHealth, Employees’ Compensation Commission, and Pag-Ibig

Employees in the private sector are covered under the SSS Law wherein the mission is to promote and perfect a sound and viable tax exempt social security system suitable to the needs of the people which shall provide meaningful protection to members and their beneficiaries against hazards of disability, sickness, maternity, old age, death and other contingencies resulting in loss of income or financial burden.
PhilHealth assumed the responsibility of administering the former Medicare program for private sector employees, with its landmark transfer from the Social Security System (April 1998). With this transfer came the turnover of the health insurance funds, initially totaling P14 billion from the SSS. The amount covers employee and employers' shares in the medical care program. The benefit package includes the following categories of personal health services

Inpatient hospital care:
• Room and board;
• Services of health care professionals;
• Diagnostic, laboratory, and other medical examination services;
• Use of surgical or medical equipment and facilities;
• Prescription drugs and biologicals, subject to the limitations stated in Section 37 of RA 7875; and
• Inpatient education packages.

Outpatient care:
• Services of health care professionals;
• Diagnostic, laboratory, and other medical examination services;
• Personal preventive services;
• Prescription drugs and biologicals, subject to limitations described in Section 37 of RA 7875; and
• Emergency and transfer services

An employee may also recover from the Employees Compensation and State Insurance Fund in case of work-related disabilities.

According to Republic Act 7742 which was fully implemented on January 1, 1995, membership to the Pag-IBIG Fund shall be mandatory for all employees covered by the Social Security System (SSS). This mandatory coverage extends to expatriates whose age is up to 60 years old and who are compulsorily covered by the SSS. In the absence of an explicit exemption from SSS coverage, the said expatriate, upon assumption of office, shall be compulsorily covered by the Fund. Some of the benefits under the Pag-IBIG program are the housing loan, calamity loan, and a provident savings program.

Termination of Employment

It is the constitutional right of workers to security of tenure and their right to be protected against dismissal except for just and authorized cause and without prejudice to the requirement of notice under Article 283 of the Labor Code. Due process in termination disputes is the heart of security of tenure and is personal to the employee.

The following are the standards of due process for termination of employment under Article 282 of the Labor Code:

(a) A written notice served on the employee specifying the ground and grounds for termination, and giving to said employee reasonable opportunity within which to explain his side;

(b) A hearing or conference during which the employee concerned, with the assistance of counsel if the employee so desires, is given the opportunity to respond to the charges, present his evidence, or rebut the evidence presented against him; and

(c) A written notice of termination served on the employee indicating that upon due consideration of all the circumstances, grounds have been established to justify the termination. In case of termination, the foregoing notices shall be served on the employee’s last known address.

For termination of employment as based on authorized causes under Article 283 of the Labor Code, the requirements of due process shall be deemed complied with upon service of a written notice to the employee and the appropriate Regional Office of the Department of Labor at least 30 days before the effectivity of the termination specifying the grounds for termination.

If the termination is brought about by the completion of the contract or phase thereof, no prior notice is required. If the termination is brought about by the failure of an employee to meet the standards of the employer in the case of probationary employment, it shall be sufficient that a written notice is served the employee within a reasonable time from the effective date of termination.

Under Article 282 of the Labor Code, the following are considered just causes for termination:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work;
(b) Gross or habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed by him by his employer or duly authorized representative;
(d) 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 representative; and
(e) Other causes analogous to the foregoing.