2013 (Labor Law) Bar Exam Questions: Question 3

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III

Inter-Garments Co. manufactures garments for export and requires its employees to render overtime work ranging from two to three hours a day to meets its clients deadlines. Since 2009, it has been paying its employees on overtime an additional 35% of their hourly rate for work rendered in excess of their regular eight working hours.

Due to the slowdown of its export business in 2012, Inter-Garments had to reduce its overtime work; at teh same time, it adjusted the overtime rates so that those who worked overtime were only paid an aditional 25% instead of the previous 35%. To replace the workers’overtime rate loss, the company granted a one-time 5% across-the-board wage increase.

Vigilant Union, the rank-and-file bargaining agent, charged the company with Unfair Labor Practice on the ground that (1) no consultations had been made on who would render overtime work; and (2) the unilaterial overtime pay rate reduction is a violation of Article 100 (entitled Prohibition Against Elimination or Diminution of Benefits) of the Labor Code.

Is the union position meritorious? (8%)

4 comments

  1. 1) Position lacks merit – Management Prerogative (who would render overtime)
    2) Position is meritorious – Company practice that has acquiesced into benefits of employees over a period of time cannot be unilaterally revoked.

  2. No as to (1). It’s a management prerogative on
    on who among its employees should render
    overtime work.

    It depends No (2).

    In this particular case, the employer has been paying
    more than that required by Art. 87, it can only be
    claimed as violating Artical 100 (Prohibition Against
    Elimination of Diminution of Benefits) if the following
    criteria are met in order to prove that such benefit
    has ripened into company practice:

    1. The act of the employer has been done
    for a considerable period of time.

    (Thus far, jurisprudence has not laid down anyext or
    definitive rule requiring a specific minimum number
    of years.)

    2. The act should be done consistently
    and intentionally.

    3. The act should not be a product of
    erroneous interpretation or construction of
    a doubtful or difficult question of law
    or provision in the CBA.

    Referenced Laws/Legal Principles:

    “Principle of non-elimination or
    non-diminution of benefits as applied
    to wages”:

    This principle mandates that the reduction or diminution
    of withrawal by employers of any benefits, supplements
    or payments as provided in existing laws, individual
    agreements or collective bargaining agreements between works
    and employers or voluntary employer practice or policy,
    is not allowed.

    Labor Code
    Art. 87. Overtime work. 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. 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.

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