Dear Attorney,

I hope this message finds you well. I work for a microfinance company and have a few concerns regarding the working conditions imposed on me and my colleagues. Our regular working hours are from 8:30 AM to 5:30 PM, which we try to strictly observe. However, due to certain challenges, such as uncooperative clients, we sometimes end up working beyond this schedule. While the company does not compensate us for the extra hours, I can still accept this as part of the job.

What I find more troubling is that we are being required to leave the office by 6:00 AM to begin our work in the field. If we do not comply with this requirement, we are threatened with disciplinary action or even dismissal. Is this legal under Philippine labor laws? I would greatly appreciate your guidance on this matter.

Sincerely,
A Concerned Employee

Understanding Labor Rights in the Context of Microfinance: Hours of Work, Overtime, and Employer Obligations

The concern raised by the employee centers on the legality of certain workplace practices, specifically the requirement to leave the office at 6:00 AM, in addition to the lack of compensation for overtime hours. To address this issue comprehensively, we must first examine the relevant provisions of the Labor Code of the Philippines and associated regulations. We will explore the legal concepts of work hours, overtime, employee protections, and the lawful use of disciplinary actions in the workplace.

I. Defining Work Hours Under Philippine Labor Law

Under the Labor Code of the Philippines, specifically Article 83 (now renumbered as Article 85), the regular work hours are set at eight (8) hours a day. These hours typically do not include breaks for meals or rest periods. The standard working hours, as provided by law, do not exceed eight hours in a given workday unless specific exceptions apply, such as for certain industries or professions.

In the scenario described, the employee's regular working hours are from 8:30 AM to 5:30 PM, which is compliant with the general requirement of an 8-hour workday. However, the company’s imposition of a 6:00 AM start—which effectively extends the workday beyond the prescribed hours—is where the question of legality arises.

It is crucial to determine whether the time from 6:00 AM (the time the employee is required to leave the office) until 8:30 AM (the start of the formal workday) constitutes compensable work hours. Under Article 84 (now Article 86) of the Labor Code, “work hours” are defined as the time during which an employee is required to be on duty, whether at the workplace or at a designated worksite, and when performing actual work.

In the case of microfinance workers, if employees are required to report to the office, perform certain duties, or engage in activities related to work (such as field collections or meeting clients), then these hours must be considered compensable. Requiring employees to be at a specific place of work before the official start of the workday without compensating them for this time would likely violate the principle that work hours must include all time during which the employee is “suffered or permitted to work.”

II. Overtime Work and Compensation

Article 87 of the Labor Code provides that any work performed beyond the eight-hour workday must be compensated with an additional pay equivalent to the regular wage plus at least 25% of the employee’s hourly rate. In cases where overtime work is performed on a holiday or rest day, the premium increases to 30%.

In this case, if the employees are required to be on duty or perform work-related activities from 6:00 AM onwards, the hours from 6:00 AM to 8:30 AM would be considered overtime. The company would then be legally obligated to pay overtime rates for this period. Failure to compensate employees for such additional hours would constitute a violation of overtime pay regulations.

It is also worth noting that the Department of Labor and Employment (DOLE) requires employers to record employees’ working hours accurately. The law mandates the use of timekeeping devices or other reliable systems to track actual work hours to ensure employees receive the appropriate wages, including overtime pay when applicable.

III. Right to Compensation for Extra Work

Employees are entitled to compensation for any work performed beyond their regular working hours. If employees are being compelled to begin their workday at 6:00 AM without additional compensation, this would likely violate the employee’s rights under both the Labor Code and DOLE guidelines. The company’s failure to compensate the employee for the hours worked outside the 8:30 AM to 5:30 PM window could also lead to penalties and sanctions from DOLE.

The only legal exceptions to these requirements are when employees voluntarily waive their right to overtime pay through mutual agreement or in cases where compensatory time off is granted in lieu of overtime pay, provided this is expressly stated in the employment contract or collective bargaining agreement.

IV. Disciplinary Action for Non-Compliance with Unreasonable Work Requirements

The concern also mentions the threat of disciplinary action or dismissal if employees do not comply with the company’s demand to start work at 6:00 AM. Under Article 282 (now Article 296) of the Labor Code, termination of employment is only justified on the following grounds:

Serious misconduct or willful disobedience of lawful orders.
Gross and habitual neglect of duties.
Fraud or willful breach of trust.
Commission of a crime against the employer or any immediate family member.
Other analogous causes.

The key term here is “lawful orders.” An employer may issue instructions to employees, but these instructions must be reasonable and lawful. Requiring an employee to begin work at 6:00 AM without appropriate compensation may be considered an unlawful order, as it violates the employee’s right to overtime pay. An employee’s refusal to comply with an unlawful order cannot be used as a legitimate basis for disciplinary action or dismissal.

Moreover, Article 294 (formerly Article 279) of the Labor Code protects employees from unlawful dismissal. If an employee is dismissed on grounds that are not justifiable under the law, the employee may file a complaint for illegal dismissal, seeking reinstatement and back wages. In cases where dismissal is found to be unjust, the employer can be held liable for damages, including back pay, moral damages, and attorney’s fees.

V. Constructive Dismissal and Unreasonable Work Conditions

If an employee is forced to comply with unreasonable or illegal work requirements, such as working unpaid overtime or facing threats of disciplinary action for non-compliance, this could potentially amount to constructive dismissal. Constructive dismissal occurs when an employer creates such difficult, unbearable, or illegal working conditions that the employee has no choice but to resign.

Constructive dismissal is treated by law as a form of illegal dismissal. The affected employee may file a complaint with DOLE or the National Labor Relations Commission (NLRC) to seek remedies, including reinstatement or separation pay, as well as damages.

VI. DOLE Inspections and Complaints Process

Employees who believe that their rights have been violated, whether through unpaid overtime, unlawful work conditions, or threats of illegal dismissal, may file a complaint with the DOLE. The process generally begins with a request for assistance (RFA) through the DOLE’s Single Entry Approach (SEnA) mechanism, which aims to resolve disputes between employees and employers within 30 days. If the dispute is not resolved through mediation, the employee may escalate the complaint to the NLRC for adjudication.

DOLE also conducts labor inspections to ensure that employers comply with labor laws, including laws on overtime pay, rest periods, and working hours. Employers found violating labor standards may face administrative penalties, including fines, and may be required to pay affected employees back wages.

VII. Conclusion and Recommendations

In summary, the requirement for employees to start work at 6:00 AM without compensating them for the additional hours is a violation of the Labor Code’s provisions on work hours and overtime pay. Employers are obligated to compensate employees for all hours worked beyond the standard eight-hour workday, and disciplinary action for refusal to comply with such an illegal order would likely be deemed unlawful.

The employee in this case has several options for addressing this issue:

Request dialogue with management, citing the provisions of the Labor Code to clarify the legality of the company’s requirements.
File a complaint with DOLE to seek assistance in enforcing their rights to fair compensation and protection from unlawful disciplinary actions.
If the issue escalates, the employee may consider filing a formal complaint for illegal dismissal or constructive dismissal if they are forced to resign due to unreasonable work conditions.

It is important for employees to know their rights and for employers to respect labor standards to maintain a fair and just working environment.