Prohibition against elimination or diminution of employee benefits

Aside from appearing in court to represent clients, my job as a lawyer includes rendering legal advice.

Of course, the advice I give will depend on, among other things, the legal questions asked.

When it comes to labor law, among the questions that I often encounter is on the elimination or diminution of employee benefits.

In particular, I am often asked if employers are allowed to eliminate or diminish the benefits of their employees.

In order to answer this question accurately, it has to be made depending on whether the benefits demanded are required by law or not.

Benefits required by law

Employees are entitled to benefits required by law. And employers are obliged to pay them in full.

Employers are given no right to eliminate or diminish them even with the consent of their employees.

Benefits not required by law

By contrast, employees are not entitled to benefits not required by law. And employers may refuse to pay them if so demanded.

Employers may, however, give benefits not required by law to their employees.

But, once given, and when the giving of these benefits has ripened into a company practice, employers can no longer eliminate or diminish them without the consent of their employees, because they are now deemed part of the employment contract even if unwritten.

Company practice 

The giving of benefits not required by law ripens into a company practice when it is done consistently, deliberately, and for over a long period of time.

It becomes a company practice when employers, despite knowing full well that their employees are not legally entitled, continuously give these benefits to them for over a long period of time.

(References: Article 100 of the Labor Code of the Philippines, Globe Mackay Cable and Radio Corporation, et. al. vs. National Labor Relations Commission, et. al., G.R. No. 74156, June 29, 1988, Davao Integrated Port Stevedoring Services vs. Ruben V. Abarquez, et. al., G.R. No. 102132, March 19, 1993, Davao Fruits Corporation vs. Associated Labor Unions (ALU), et. al., G.R. No. 85073, August 24, 1993, Sevilla Trading Company vs. A.V.A. Tomas E. Semana, et. al., G.R. No. 152456, April 28, 2004/Author’s Note: This was first posted on the Internet on August 12, 2013)

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Author: Pinggoy Lopez

Inspiring others is my greatest passion

One thought on “Prohibition against elimination or diminution of employee benefits”

  1. Sir in your statement (“It becomes a company practice when employers, despite knowing full well that their employees are not legally entitled, continuously give these benefits to them for over a long period of time.”) what is the minimum years required to be considered as “long period of time”? Tnx

    Like

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