Tuesday, September 16, 2014

Minimum wage and separation pay for pieceworkers; Pulp & Paper Inc vs NLRC : 116593 : September 24, 1997 : J. Panganiban : Third Division

See - Pulp & Paper Inc vs NLRC : 116593 : September 24, 1997 : J. Panganiban : Third Division

"x x x.
First Issue:  Computation of Minimum Wage
Petitioner argues that private respondent was a piece-rate worker and not a time-worker.  Since private respondent’s employment as “(p)acker/(w)rapper” in 1975 until her separation on June 29, 1991, “(h)er salary depended upon the number of ‘reams of bond paper’ she packed per day.”  Petitioner contends that private respondent’s work “depended upon the number and availability of purchase orders from customers.”  Petitioner adds that, oftentimes, “packers/wrappers only work three to four hours a day.”  Thus, her separation pay “must be based on her latest actual compensation per piece or on the minimum wage per piece as determined by Article 101 of the Labor Code, whichever is higher, and not on the daily minimum wage applicable to time-workers.”[11]
Compensation  of Pieceworkers
In the absence of wage rates based on time and motion studies determined by the labor secretary or submitted by the employer to the labor secretary for his approval, wage rates of piece-rate workers must be based on the applicable daily minimum wage determined by the Regional Tripartite Wages and Productivity Commission.  To ensure the payment of fair and reasonable wage rates, Article 101[12] of the Labor Code provides that “the Secretary of Labor shall regulate the payment of wages by results, including pakyao, piecework and other nontime work.”  The same statutory provision also states that the wage rates should be based, preferably, on time and motion studies, or those arrived at in consultation with representatives of workers’ and employers’ organizations.  In the absence of such prescribed wage rates for piece-rate workers, the ordinary minimum wage rates prescribed by the Regional Tripartite Wages and Productivity Boards should apply.  This is in compliance with Section 8 of the Rules Implementing Wage Order Nos. NCR-02 and NCR-02-A -- the prevailing wage order at the time of dismissal of private respondent, viz.:[13]
“SEC. 8.  Workers Paid by Results.  --  a)  All workers paid by results including those who are paid on piece work, takay, pakyaw, or task basis, shall receive not less than the applicable minimum wage rates prescribed under the Order for the normal working hours which shall not exceed eight (8) hours work a day, or a proportion thereof for work of less than the normal working hours.
The adjusted minimum wage rates for workers paid by results shall be computed in accordance with the following steps:
1)  Amount of increase in AMW x 100 = % increase
Previous AMW
2)  Existing rate/piece x % increase = increase in rate/piece;
3)  Existing rate/piece + increase in rate/piece = adjusted rate/piece.
b) The wage rates of workers who are paid by results shall continue to be established in accordance with Art. 101 of the Labor Code, as amended and its implementing regulations.” (Underscoring supplied.)
On November 29, 1991, private respondent was orally informed of the termination of her employment.  Wage Order No. NCR-02, in effect at the time, set the minimum daily wage for non-agricultural workers like private respondent at P118.00.[14] This was the rate used by the labor arbiter in computing the separation pay of private respondent.  We cannot find any abuse of discretion, let alone grave abuse, in the order of the labor arbiter which was later affirmed by the NLRC.
Moreover, since petitioner employed piece-rate workers, it should have inquired from the secretary of labor about their prescribed specific wage rates.  In any event, there being no such prescribed rates, petitioner, after consultation with its workers, should have submitted for the labor secretary’s approval time and motion studies as basis for the wage rates of its employees.  This responsibility of the employer is clear under Section 8, Rule VII, Book III of the Omnibus Rules Implementing the Labor Code:
“Section 8.  Payment by result.  (a)   On petition of any interested party, or upon its initiative, the Department of Labor shall use all available devices, including the use of time and motion studies and consultations with representatives of employers’ and workers’ organizations, to determine whether the employees in any industry or enterprise are being compensated in accordance with the minimum wage requirements of this Rule.
(b)      The basis for the establishment of rates for piece, output or contract work shall be the performance of an ordinary worker of minimum skill or ability.
(c)      An ordinary worker of minimum skill or ability is the average worker of the lowest producing group representing 50% of the total number of employees engaged in similar employment in a particular establishment, excluding learners, apprentices and handicapped workers employed therein.
(d)      Where the output rates established by the employer do not conform with the standards prescribed herein, or with the rates prescribed by the Department of Labor in an appropriate order, the employees shall be entitled to the difference between the amount to which they are entitled to receive under such prescribed standards or rates and that actually paid them by employer.”
In the present case, petitioner as the employer unquestionably failed to discharge the foregoing responsibility.  Petitioner did not submit to the secretary of labor a proposed wage rate -- based on time and motion studies and reached after consultation with the representatives from both workers’ and employers’ organization -- which would have applied to its piece-rate workers.  Without those submissions, the labor arbiter had the duty to use the daily minimum wage rate for non-agricultural workers prevailing at the time of private respondent’s dismissal, as prescribed by the Regional Tripartite Wages and Productivity Boards.  Put differently, petitioner did not take the initiative of proposing an appropriate wage rate for its piece-rate workers.  In the absence of such wage rate, the labor arbiter cannot be faulted for applying the prescribed minimum wage rate in the computation of private respondent’s separation pay.  In fact, it acted and ruled correctly and legally in the premises.
It is clear, therefore, that the applicable minimum wage for an eight-hour working day is the basis for the computation of the separation pay of piece-rate workers like private respondent.  The computed daily wage should not be reduced on the basis of unsubstantiated claims that her daily working hours were less than eight.  Aside from its bare assertion, petitioner presented no clear proof that private respondent’s regular working day was less than eight hours.  Thus, the labor arbiter correctly used the full amount of P118.00 per day in computing private respondent’s separation pay. We agree with the following computation:[15]
“Considering therefore that complainant had been laid-off for more than six (6) months now, we strongly feel that it is already reasonable for the respondent to pay the complainant her separation pay of one month for every year of service, a fraction of six (6) months to be considered as one whole year.  Separation pay should be computed based on her minimum salary as will be determined hereunder.
Separation pay 1 month = 16 years
P118.00 x 26 x 16 years = P49,088.00”
The amount “P118.00” represents the applicable daily minimum wage per Wage Order Nos. NCR-02 and NCR-02-A; “26”, the number of working days in a month after excluding the four Sundays which are deemed rest days; “16”, the total number of years spent by private respondent in the employ of petitioner.

Second Issue:  Computation of Separation Pay
Petitioner questions not only the basis for computing private respondent’s monthly wage; it also contends that private respondent’s separation pay should not have been computed at one month’s pay for every year of service.  Because private respondent should be considered retrenched, the separation pay should be “one month’s pay or at least one/half (1/2) month pay for every year of service, whichever is higher, and not one (1) month’s pay for every year of service as public respondent had ruled.”[16]
Petitioner misapprehended the ground relied upon by public respondent for awarding separation pay.  In this case, public respondent held that private respondent was constructively dismissed, pursuant to Article 286 of the Labor Code which reads:
“ART. 286.  When employment not deemed   terminated.  --  The bonafide suspension of the operation of a business or undertaking for a period not exceeding six (6) months, or the fulfillment by the employee of a military or civic duty shall not terminate employment.  In all such cases, the employer shall reinstate the employee to his former position without loss of seniority rights if he indicates his desire to resume his work not later that one (1) month from his resumption of operations of his employer or from his relief from the military or civic duty.”
Petitioner failed to discern that public respondent, in finding that the services of private respondent were terminated, merely adopted by analogy the rule on constructive dismissal.  Since private respondent was not reemployed within six (6) months from the “suspension” of her employment, she is deemed to have been constructively dismissed.[17] Otherwise, private respondent will remain in a perpetual “floating status.”  Because petitioner had not shown by competent evidence any just cause for the dismissal of private respondent, she is entitled to reinstatement[18] or, if this is not feasible, to separation pay equivalent to one (1) month salary for every year of service.  Private respondent, however, neither asked for reinstatement[19] nor appealed from the labor arbiter’s finding that she was not illegally dismissed; she merely prayed for the grant of her  monetary claims.  Thus, we sustain the award of separation pay made by public respondent,[20] for employees constructively dismissed are entitled to separation pay.  Because she did not ask for more, we cannot give her more.  We repeat: she appealed neither the decision of the labor arbiter nor that of the NLRC.  Hence, she is not entitled to any affirmative relief.
Furthermore, we cannot sustain petitioner’s claim that private respondent was retrenched.  For retrenchment to be considered a ground for termination, the employer must serve a written notice on the workers and the Department of Labor and Employment at least one month before the intended date thereof.[21] Petitioner did not comply with this requirement. 
Third Issue:  Determination of Salary Differential
In light of the foregoing discussion, we must also dismiss petitioner’s challenge to the computation of salary differential.  As earlier observed, private respondent is entitled to the minimum wage prevailing at the time of the termination of her employment.  The same rate of minimum wage, P118.00, should be used in computing her salary differential resulting from petitioner’s underpayment of her wages.  Thus, the labor arbiter correctly deducted private respondent’s actually received wage of P60 a day from the prescribed daily minimum wage of P118.00, and multiplied the difference by 26 working days, and subsequently by 16 years, equivalent to her length of service with petitioner.  Thus, the amount of P31,149.56 as salary differential.[22]
Petitioner argues that “the work of the private respondent is seasonal, being dependent upon the availability of job-orders” and not “twenty-six (26) days a month.”[23] Further, petitioner contends that private respondent herself admitted she was “a piece worker whose work [was] seasonal.”[24]
Contrary to the assertion of petitioner, neither the assailed Decision nor the pleadings of private respondent show that private respondent’s work was seasonal.  More important, petitioner utterly failed to substantiate its allegation that private respondent’s work was seasonal.  We observe that the labor arbiter based the computation of the salary differential on a 26-day month on the presumption that private respondent’s work was continuous.  In view of the failure of petitioner to support its claim, we must sustain the correctness of this computation.
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