5 Labor Law Tips for Entrepreneurs

By dickburge5273 | Inspirations

May 30


Whether you are a small or a big enterprise, it is always a must  that you are knowledgeable of our very own laws – especially the labor law.  As entrepreneurs, we often have our minds focused in getting the results that we want, such that we often fail to understand the law that governs our businesses.

You may take these laws for granted (in the meantime) but it can haunt us later on especially when we become a big company.  As they say, it’s better to learn and understand the labor laws early on to avoid big problems in the future.

Here are the 5 tips on labor law for entrepreneurs that our guest mentor, Atty. Victor Mariano shared to us during the #MentoringMonday session last May 30.


1. What Is Practical To Do May Not Always Be Legal

Most entrepreneurs make decisions based on circumstances that would (at least) be beneficial for them, without realizing that they are putting themselves at a big risk. This are decisions that may be “practical” for a time, but would not be viable in the longer run.

Some business owners, especially those who are not aware about the law, do not comply with the labor standards set by legal entities. Take for example an employer who does not provide the right benefits for his employees. Instead, he gives his staff a certain amount as incentives as a replacement for the supposed benefits they should be getting. Now, this seems to be a practical solution for that business owner, since he no longer has to worry about giving these bunch of benefits to his workers. But, this is such a big risk that the entrepreneur is taking or any entrepreneur will be taking.

Note that the law has mandated every employers to provide the basic benefits to their employees. And there are corresponding legal sanctions for those business owners who would violate this requirement by the law. Now, it’s up for the entrepreneur to decide. Will he play safe and do the legal? Or will he chose to be practical?


2. Philippine Labor Laws Were Created In Favor Of Employees

“Those who have less in life shall have more in law.” 

Whether you like it or not, labor laws are pro employees. Between an employer and an employee, it is the latter that is always in the losing end, since they can be victims of unjust dismissal or are deprived of their jobs without diligence to the due process.  They are considered as ‘those who have less in life’, whose rights which has been guaranteed by the the Constitution, are violated. And they are the ones granted full protection in order to promote social justice. This is the reason why it is very important for everyone to understand the Labor Code or any laws, in order for everyone to reach a common understanding.


3.  Requiring An Employee To Resign Can BeConstrued As Constructive Dismissal

One of the common mistakes of some entrepreneurs, or even managers/supervisors is to demand an employee to resign.

Constructive dismissal happens when an employee is forced to terminate his employment due to the employer’s unjust treatment. It is also considered as dismissal in disguise, which can be a serious violation to the Labor Code, especially if it did not follow the due process. This is why business owners should NEVER tell their employees to resign, because whatever was said can be held against them. What they can do instead, is to let the employee realize his mistake  and to let him decide on what he will do in order to (at least) appease the entrepreneur. And if he chose to resign, he should be the one who will do the writing in order to keep the sense of voluntarism in his action.

Remember, the law sides on “those who have less in life”. That is why it is important that entrepreneurs should always consider Tip #2 (Philippine Labor Laws were created in favor of the Employees) before making decisions to avoid possible law suits that could be charged to them.


4.  Minimum Wage Is Different Per Region

The minimum wage is not the same for the whole country. It actually differs per region, especially for the National Capital Region which is considered to have the highest rate, due to the high cost of living. The minimum wage is prescribed by the Regional Tripartite Wages and Productivity Board (RTWB) in every region as a consideration to the labor force’s welfare to assure them of fair wage and to avoid exploitation. Under the law, if an entrepreneur refuse to pay the right wage, he can be held liable to that so-called double indemnity, wherein he has to pay the employee twice the prescribed increase in the wage rate that was not paid.


5.  Undertime Is Never Offset By Overtime

There are entrepreneurs and employees who opt for offsetting arrangements.

Take for example an employee who went under time for about two hours. He then would make an arrangement with his supervisor or the boss that instead of considering the two hours as under time, he will just work two more hours the following day in order to compensate for the two-hour deficit. Although this might be a practical arrangement for the business owner, this still goes against what has been stated in the law.

Despite the arrangement between the employee and the boss, the latter is still liable for the over time pay. As defined, over time pay is work done in excess of 8 hours per day. And under the law, anything beyond 8 hours should be paid the overtime premium. In this sense, the over time should still be paid and the under time should still be deducted.



*You can view the full video of the Leapreneur #MentoringMonday by joining our private Leapreneur Facebook Group.


About the Mentor

5 tips on labor law for entrepreneurs


Attorney Cornelius Victor Mariano acquired his Juris Doctor (J.D.) Degree from Ateneo De Manila University School of Law. His career as a lawyer began in 2001, where he obtained experience from recognized law firms. He was a former associate at the firm of the late Senator Raul Roco, where he was extensively involved in corporate law and intellectual property practice. He also discharged corporate housekeeping duties, incorporation services, corporate restructuring, due diligence, and prepared numerous corporate reports to regulatory agencies.

Later on, he became an associate of the Platon Martinez Flores San Pedro and Leano Law Office.  During his stint in this firm, he was immersed in the handling of labor, criminal, and civil, litigation, alternative dispute resolution, and tax and customs. He was also active in advising multinational companies regarding labor and corporate issues.

Currently, he is the managing partner of the Mariano and Riola law offices in Mandaluyong. They cater to a full-service law active in the general practice of law such as labor law practice, corporate law practice, real estate practice and in civil, criminal, labor, and tax litigation.

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