The Terms And Conditions Of Employment | Labor Must Know
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The terms and conditions of employment are the covenants between the capital and labor. We are working beings. We like to toil. We like to do something. These what make us survive. Obviously, this is one way to earn wherewithal and to provide for one’s needs and that of his family. Thus, it is important that there are rules, terms, and contract that should exist between the who will provide the services and those who will benefit from the same.

Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is superior of capital, and deserves much the higher consideration. – Abraham Lincoln1

Terms and Conditions of Employment | Philippines

Labor standards refers to the minimum requirements prescribed by existing laws, rules and regulations relating to wages, hours of work, cost-of-living allowance and other monetary and welfare benefits, including occupational, safety and health standards.2

The Labor Code provides the conditions or standards of employment. These standards apply only if an employer-employee relationship exist.

The relations between employer and employee are not merely contractual. They are so impressed with public interest that labor contracts must yield to the common good. Therefore, such contracts are subject to special laws on labor unions, collective bargaining, strikes and lockouts, closed shop, wages, working conditions, hours of labor and similar subjects.3

Applicability and non-applicability

Working conditions shall apply to employees in all establishments and undertakings whether for profit or not. The following employees are not covered; government employees except employees of government-owned and control corporations created under the corporation code, managerial employees, members of the managerial staff, field personnel, members of the family of the employer who are dependent on him for support, domestic workers or kasambahay not assigned in commercial, industrial or agricultural, persons in the personal service of another, and workers who are paid by result as determined by Department of Labor and Employment regulation.4

Hours of work

Hours worked shall include an employee all time during an employee is required to be on duty or to be at a prescribed workplace and all time during which an employee is suffered or permitted to work.5 All hours are hours worked which the employee is required to give their employer, regardless of whether or not such hours are spent in productive labor or involve physical or mental exertion.

An employee need not leave the premises of the work place in order that their rest period shall not be counted, it being enough that they stop working, may rest completely and may leave their work place to go elsewhere, whether within or outside the premises of their workplace.6

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.7

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.8

The normal hours of work of any employee shall not exceed eight hours a day.9 Part-time work, or a day’s work of less than eight hours, is not prohibited.10 The law is designed to minimize unemployment by forcing employers, in case where more than eight-hour operation is necessary to utilize different shifts of laborers or employees working only for eight hours each.11


The exception to eight-hour applies to health personnel in cities and municipalities with a population of at least one million or hospitals and clinics with a bed capacity of at least one hundred shall hold regular office hours for eight hours a day, for five days a week, exclusive of time for meals, except where the exigencies of the service require that such personnel work for six days or forty-eight hours.12

Hospital and clinic personnel can start and end work at any hour on any day but would not work for more than 8 hours in a day, nor more than 40 hours in one week. Hospital and clinic personnel may be scheduled to work for more than 5 days or 40 hours in a week, if they are paid overtime. Health personnel shall include resident physicians, nurses, nutritionists, dietitians, pharmacists, social workers, laboratory technicians, paramedical technicians, psychologists, midwives, attendants and all other hospital or clinic personnel.13

Night shift differential pay

Night Shift Differential is the additional compensation of ten percent of an employee’s regular wage for each hour of work performed between 10pm and 6am.14 Night shift employees are entitled to a weekly night-off (usually Saturday evening) or a weekly rest period of twenty-four hours beginning at the start of the night shift.

Night shift employees are also entitled to the premium pay on special days and holidays. These days are calculated as 24-hour calendar days that begin at midnight and terminate at midnight the following day. The premium pay for the night shift also starts or ends at midnight.

However, the employment contract, company policy or collective bargaining agreement may provide that in the case of night shift workers, days including special days and regular holidays shall begin on the night before a calendar day.

Overtime compensation

Overtime pay is additional compensation for work or services provided or done by employees or laborers who are subject to the eight-hour labor law in excess of eight hours per day. Work can be done for more than eight hours per day as long as the employee receives extra pay that is at least 25% higher than his regular salary.

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 thereof.15

Regular wage means regular base pay. It includes the cash wage only without deduction on account of facilities provided by the employer.16 It excludes money received in different concepts, such as Christmas bonus and other fringe benefits.

Premium Pay for Rest days and Special days

Yet, when the overtime work was performed on the employee’s rest day or on special days or regular holidays, the premium pay, must be included in the computation of the overtime pay.17 Work performed on a rest day shall be paid an additional compensation equivalent to thirty percent of the regular wage.

Where an employee is made or permitted to work on his scheduled rest day, he shall be paid an additional compensation of at least thirty percent of his regular wage. An employee shall be entitled to such additional compensation for work performed on Sunday only when it is his established rest day.18

Combination and overlapping

When the tour of duty of a laborer falls at nighttime [between 10:00pm and 6:00am], the receipt of overtime pay will not preclude the right to night differential pay. The latter is payment for work done during the night, while the other is payment for the excess of the regular eight-hour work.19

Undertime cannot be offset 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.20

Offsetting work on a regular day with work rendered on a holiday or rest day is prohibited because such deprives the employee of additional pay or premium.21

Composite package

Composite or package pay or all-inclusive salary is an arrangement where the employee’s salary includes the overtime pay. Such arrangement is valid provided that there is a clear written agreement knowingly and freely entered by the employee and the mathematical result shows that the agreed legal wage rate and the overtime pay, computed separately, are equal to or higher than the separate amounts legally due.22

Compressed work week

Compressed work week may be resorted to by the employer to prevent serious losses due to causes beyond his control.23

Under this scheme, the number of workdays is reduced, but the number of work hours in a day is increased to more than eight, but no overtime pay may be claimed. Thus, it is an alternative arrangement wherein the normal workweek is reduced to less than six days but the total number of normal work hours per week shall remain at forty-eight hours.

Breaktime of employees and Interruptions

Subject to such regulations as the Secretary of Labor may prescribe, it shall be the duty of every employer to give his employees not less than sixty minutes time-off for their regular meals.24 The eight-hour work period does not include the meal break.

Employees are not prohibited from going out of the premises as long as they return to their posts on time. Nowhere in the law may it be inferred that employees must take their meals within the company premises.25 The employees themselves may request that the meal period be shortened so that they can leave work earlier than the previously established schedule.


Brownouts not exceeding twenty minutes shall be treated as hours worked. Brownouts running for more than twenty minutes may not be treated as hours worked provided that the employees can leave their work place or go elsewhere whether within or without the work premises or the employees can use the time effectively for their own interest.26

Inactivity by reason of interruptions

The time during which an employee is inactive by reason of work interruptions beyond his control is 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.27

Idle time

The idle time that an employee may spend for resting and dining 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.28

A laborer need not leave the premises of the factory, shop or boat in order that his period of rest shall not be counted, it being enough that he cease to work, may rest completely and leave or may leave at his will the spot where he actually stays while working, to go somewhere else, whether within or outside the premises of said factory, shop or boat. If these requisites are complied with, the period of such rest shall not be counted.29

Travel time

Unless called to travel during an emergency, travel is done in a conveyance provided by the employer, under trying and hazardous conditions, and under the supervision and control of the employer, an employee who travels from home before his regular workday and returns to his home at the end of the workday is engaged in ordinary home-to-work travel that is not considered hours worked.

An employee’s travel time between jobsites during the workday must be included in the calculation of hours worked. When an employee is required to report to a meeting location to receive instructions or to complete other tasks, the journey from the specified location to the workplace is considered part of the day’s work.

An employee is considered to be away from home when they travel over night. When it interferes with the employee’s workday, travel away from home is considered worktime. The time is the number of hours worked, including both conventional working hours and the corresponding non-working hours.

Employees performing tasks during their commute which are not merely incidental to the employee’s job, and are primarily for the benefit of the employer (such as a company driver performing a carpool service for coworkers according to an agreement with the company), are entitled to overtime pay.30

Compensable rest periods or coffee breaks

Rest periods or coffee breaks running from five-to-twenty minutes shall be considered compensable working time. To shorten meal time to less than twenty minutes is not allowed. If it is less than twenty minutes, it becomes only a rest period and is considered working time.5

If standby is for emergency work, meal break is part of hours worked. For a full one-hour undisturbed lunch break, the employees can freely and effectively use this hour not only for eating but also for their rest and comfort. Since the employees are no longer required to work during this one-hour lunch break, there is no more need for them to be compensated for this period.31

Whether waiting time constitutes working time depends upon circumstances of each particular case. The facts may show that the employee was engaged to wait or may show that he waited to be engaged. The controlling factor is whether time spent in idleness is spent predominantly for the employer’s benefit or the employee’s.

As mentioned, a laborer does not need to leave the factory, shop, or boat in order for his or her period of rest to be counted; all that is required is that he or she stop working. He or she may then fully relax, leave, or choose to leave the location where he or she actually works to go somewhere else, whether inside or outside the factory, shop, or boat’s premises.

If these requisites are complied with, the period of such rest shall not be counted. 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.32

An employee is considered working while on call when he is required to remain on call in the employer’s premises or so close thereto or he cannot use the time effectively and gainfully for his own purpose.33

Final Note

The International Labor Standards provide a policy framework for it to work to promote social justice in the world of work and realize the decent work agenda. The Philippines according to the Global Worker’s Rights Index 2018.

It was again named by an international labor union federation among the ten worst countries for workers in the world. In a statement after the release of the 2021 Global Rights Index, the general secretary said, “workers are under attack like never before”.

  1. Lincoln: Labor is the Superior of Capital[]
  2. Maternity Children’s Hospital vs. Secretary of Labor, G.R. No. 78909, June 30, 1989[]
  3. Article 1700, Civil Code of the Philippines[]
  4. Article 82 of the Labor Code[]
  5. Article 84 of the Labor Code[][]
  6. Section 4(b), Rule I, Book III, IRR[]
  7. Section 4(c), Rule I, Book III, IRR[]
  8. Section 4, Rule I, Book III, IRR[]
  9. Article 83 of the Labor Code[]
  10. Legend Hotel vs. Realuyo, G.R. No. 153511, July 18, 2012[]
  11. Manila Terminal Company vs. CIR, G.R. No. L-4148, July 16, 1952[]
  12. Supra., Article 83 of the Labor Code[]
  13. Ibid.[]
  14. Article 86 of the Labor Code[]
  15. Article 87 of the Labor Code[]
  16. Article 90 of the Labor Code[]
  17. Articles 94 and 95 of the Labor Code[]
  18. Article 93 of the Labor Code[]
  19. Naric vs. Naric Workers Union, G.R. No. L-12075, May 29, 1959[]
  20. Article 88 of the Labor Code[]
  21. Lagatic vs. NLRC, G.R. No. 121004, January 28, 1998[]
  22. Damasco vs. NLRC. G.R. No. 115755, December 4, 2000[]
  23. Linton Commercial Co., Inc. et al. vs. Hellera, et al., G.R. No. 163147, October 10, 2007, citing DOLE Explanatory Bulletin, July 23, 1985[]
  24. Article 85 of the Labor Code[]
  25. Philippine Airlines vs. NLRC, G.R. No. 132805, February 2, 1999[]
  26. Durabuilt Recapping Plant & Co. vs. NLRC, July 27, 1987[]
  27. IRR Labor Code, Sec. 4(d), Rule I, Book III[]
  28. National Development Corp. vs. CIR, G.R. No. L-15422, November 30, 1962[]
  29. Luzon Stevedoring Co. vs. Luzon Marine Department Union, G.R. No. L-9265, April 29, 1957[]
  30. Hilario Rada vs. NLRC, G.R. No. 96078, January 9, 1992[]
  31. Sime Darby Pilipinas vs. NLRC, G.R. No. 119205, April 15, 1998[]
  32. IRR Labor Code, Sec. 5(a), Rule I, Book III[]
  33. IRR Labor Code, Sec. 5(b), Rule I, Book III[]

RALB Law | RABR & Associates Law Firm

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