Under Philippine labor law and jurisprudence, the payment of attorney’s fees in relation to labor relations—especially in the context of union membership, collective bargaining, and enforcement of employee rights—is governed by several key principles and statutory provisions. These rules aim to protect the rights of workers while ensuring that unions and legal counsel are fairly compensated for their services. Below is a comprehensive, detailed exposition of the applicable rules, doctrines, and practices.
1. General Rule on Attorney’s Fees in Labor Cases
Attorney’s fees in labor disputes are not automatically awarded. Under Article 2208 of the Civil Code of the Philippines, attorney’s fees may be recovered only when authorized by law, contract, or when exceptional circumstances justify such an award. In the sphere of labor law, such fees are often granted when an employee is compelled to litigate or incur expenses to protect his or her rights due to the employer’s unjustified acts.
In illegal dismissal cases, for example, the National Labor Relations Commission (NLRC) and the Labor Arbiters frequently award attorney’s fees equivalent to a percentage—typically ten percent (10%)—of the total monetary award. The rationale is that the employee would not have engaged a lawyer and incurred litigation costs if the employer had not acted unlawfully. Thus, the imposition of attorney’s fees on the employer serves both compensatory and deterrent functions.
2. Attorney’s Fees in the Context of Union Representation and Membership
When it comes to unionized workplaces, employees may receive benefits from collective bargaining agreements (CBAs) negotiated by the recognized bargaining agent (the union). Union representation includes legal services during negotiations, grievance handling, arbitration, and general labor relations advice. The question often arises: Who pays for the attorney’s fees of the union’s counsel?
A. Source of Payment: Union Funds and Dues
Typically, the cost of legal representation in collective bargaining and related union activities is borne by the union as an organization. Unions fund their operations—including legal fees—through membership dues and fees duly collected under the union’s constitution and by-laws. The principle here is that union services, including legal representation in collective bargaining, are part of the union’s duty as the recognized bargaining agent. Hence, attorney’s fees are generally not to be imposed on individual union members as a separate charge. They are paid out of union funds that are collectively contributed by members.
B. Prohibition on Additional or Arbitrary Attorney’s Fees from Union Members
Under the Labor Code and prevailing jurisprudence, no separate or additional attorney’s fees, negotiation fees, or similar charges can be arbitrarily imposed on individual employee-members of the bargaining unit as a condition for enjoyment of union benefits. This rule guards against the exploitation of employees by ensuring they are not saddled with unexpected or burdensome legal costs simply for being part of the bargaining unit.
C. Attorney’s Fees and Service Fees in Relation to Non-Union Members
Non-union members who receive the benefits of a CBA negotiated by the union are often required to pay a “service fee” equivalent to union dues. This is authorized under the Labor Code to address the issue of “free riders”—employees who enjoy the fruits of union negotiations without contributing to the cost of representation.
It must be emphasized that this service fee is not strictly an “attorney’s fee” imposed on individual employees. Rather, it is a mechanism to fairly distribute the costs of union activities and legal representation. The union’s retainer fees for counsel or any attorney’s fees incurred in the negotiation process are covered by the union’s general funds, which include the collected service fees. By doing this, the law ensures fairness and prevents non-members from unjustly benefiting at the expense of dues-paying members.
3. Attorney’s Fees in Litigation Arising from Labor Disputes
If a labor dispute escalates to formal litigation—e.g., illegal dismissal cases, unpaid wages or benefits, unfair labor practices—and the employees prevail, attorney’s fees are commonly awarded as a percentage of the monetary judgment. The rationale is straightforward: the employee had to retain counsel and participate in an adversarial process because the employer failed to comply with legal mandates. Such awards typically:
- Are not automatic; they must be substantiated by the need to engage counsel.
- Are capped at a reasonable percentage, usually around 10% of the total monetary award, unless a different amount is justified by the complexity or extent of legal work.
- Are recoverable directly from the erring employer as part of the case’s monetary relief.
4. Relationship to the Right of Employees to Counsel of Their Choice
Employees and unions have the prerogative to hire lawyers of their choosing. Union officers typically negotiate a retainer agreement with a chosen attorney or law firm. The retainer fees paid to counsel come out of the union treasury, funded by dues and, where applicable, service fees from non-members. While the amount and terms of payment for the attorney are internal matters between the union and its counsel, such arrangements must not contravene existing law or result in illegal exactions from individual members.
5. Ethical and Statutory Limitations
All attorney’s fees must be reasonable under both the Labor Code and the Code of Professional Responsibility for lawyers. Excessive, unconscionable, or unauthorized fees are prohibited. Furthermore, the Labor Code, implementing rules, and collective bargaining agreements often have provisions mandating transparency and accountability in how union funds—including those allocated for legal representation—are collected, managed, and disbursed.
6. Relevant Jurisprudence and Guidance
Philippine Supreme Court decisions have reiterated these principles, underscoring that:
- Attorney’s fees are not to be burdened upon individual employees as a separate payment item for union representation in collective bargaining.
- Where an employee is forced to litigate to recover wages or benefits rightfully due, the award of attorney’s fees at a fair rate (usually 10%) is justified.
- Service fees collected from non-union members are permissible as a means to equitably distribute the financial burden of representation and negotiation costs, including attorney’s fees, but these must be channeled through the union and not imposed directly as “attorney’s fees” on workers.
7. Conclusion
In summary, under Philippine labor law, while attorney’s fees are recognized as legitimate expenses in the prosecution or defense of labor rights, the law carefully regulates how they are collected and from whom. Within unionized environments, attorney’s fees related to negotiations and collective representation come from union funds, preventing arbitrary impositions on individual members. When employees prevail in labor litigation against employers, courts and quasi-judicial bodies may award attorney’s fees to compensate them for the costs incurred in vindicating their rights. All these measures seek to maintain equity, fairness, and reasonableness in the assessment and payment of attorney’s fees in the realm of labor relations.