2014 (Labor Law) Bar Exam Questions: Question 20

[Answer/discuss the question below. Or see 2014 bar exam Labor Law Instructions; 2014 Labor Law essay and multiple choice Questions: 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 14, 15, 16, 17, 18, 19, 21, 22, 23, 24, 25, 26, 27; See also 2014 Bar Exam: Information, Discussions, Tips, Questions and Results]


Lito was anticipating the bonus he would receive for 2013. Aside from the 13th month pay, the company has been awarding him and his other co-employees a two to three months bonus for the last 10 years. However, because of poor over-all sales performance for the year, the company unilaterally decided to pay only a one month bonus in 2013. Is Lito’s employer legally allowed to reduce the bonus? (4%)


  1. Yes, Lito’s employer is allowed to vary the amount of the bonus.

    The Labor Code prohibits the diminution of benefits, a prohibition which covers an additional benefit that has ripened into a company practice.

    In the case of Lito, what is established is the grant of an additonal bonus above the 13th month pay. The amount is clearly variable. The grant of an additional 1-month bonus, therefore, cannot be considered a diminution of benefits.

  2. yes the employer of lito is allowed not to pay the bonus.

    A grant of bonus is a management prerogative.

    Here, the company is sufferring from business reverses or losses as such it cannot be compelled to give what it cannot financially provide.

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