• Contract should state if employee is entitled to leave credits

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    Persida Acosta

    Persida Acosta

    Dear PAO,
    I just want to inquire about availment of leave credits. I have been with our company for eight months now. Some of my friends were able to have 10 to 12 days off as vacation leave during the last holiday but I was not. I tried to ask my private employer about it and he said I am not entitled because it is not indicated in my contract and that I am not considered as an “employee” of the company. Rather, I was hired as a contractor/collections’ agent for only one year. Is this correct?
    Danyl

    Dear Danyl,
    Private employees are given leave credits. Such benefit is normally indicated in the employment contract/s executed by and between the employer and employee concerned. Should it not be explicitly stated in the contract, the provisions of our labor laws will apply and as provided under Article 95 of the Labor Code of the Philippines. Under this provision, a private employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five (5) days with pay. Emphasis should be given on the existence of employer-employee relationship because in the absence thereof, the provisions of Article 95, as mentioned, will not apply.

    Furthermore, it should be noted that such grant is not applicable, even if there exists an employer-employee relationship, to private employees who are employed in establishments regularly employing fewer than 10 employees or in establishments exempted by the Secretary of Labor and Employment, after considering the viability or financial condition of such establishment. (Article 95 (b), Ibid.)

    In the situation that you have presented, it should first be determined whether you are indeed an employee of your company or merely a contractor. As explained by the Supreme Court, to be certain that there exists an employer-employee relationship, the “four-fold test” must be satisfied:

    “x x x (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the employer’s power to control the employee with respect to the means and methods by which the work is to be accomplished. Among the four, the most determinative factor in ascertaining the existence of employer-employee relationship is the “right of control test.” “It is deemed to be such an important factor that the other requisites may even be disregarded. This holds true where the issues to be resolved is whether a person who performs work for another is the latter’s employee or is an independent contractor x x x For where the person for whom the services are performed reserves the right to control not only the end to be achieved, but also the means by which such end is reached, employer-employee relationship is deemed to exist. x x x”(Royale Homes Marketing Corporation vs. Alcantara, G.R. No. 195190, July 28, 2014, Ponente: Honorable Associate Justice Mariano C. Del Castillo)

    Assuming you fall within the standards above-mentioned and you are not employed in an establishment that regularly employs fewer than 10 employees or in an establishment that is exempted by the Secretary of Labor and Employment, thus rendering you as a qualified employee, please be advised that you will only be entitled to the benefit of service incentive leave of five (5) days with pay considering that your contract made no mention of the grant of leave credits. Additionally, such benefit will only be given when you have already rendered at least one year of service with your employer as required under Article 95 of the Labor Code of the Philippines.

    We hope that we were able to answer your queries. Please be reminded that this advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.

    Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to dearpao@manilatimes.net

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