Managerial Employees

1. Summary

▪ Managerial employees have various definitions under the Labor Code.

2. Concept

Managerial employees have various definitions under the Labor Code.

The term varies depending on the Book or Title where managerial employees are being discussed or covered by certain provisions as will be discussed herein.

a. Labor Code – Book Three, Title I

Under the Labor Code, Book Three – Conditions of Employment, Title I – Working Conditions and Rest Periods, defines managerial employees as follows:

“As used herein, ‘managerial employees’ refer to those whose primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof, and to other officers or members of the managerial staff.” (Paragraph 2, Article 82, Chapter I – Hours of Work)

Book III, Title I, discusses the rules on normal hours of work – i.e. 8-hour work day, 48-hour workweek, compensable working time, meal periods, night shift differential, overtime work, overtime pay, weekly rest periods, premium pay, service incentive leave, service charges, among others. Managerial employees are exempted or excluded from the coverage of these benefits.

b. Omnibus Rules Implementing the Labor Code – Book Three

Under the Omnibus Rules Implementing the Labor Code, Book Three – Conditions of Employment, Rule I – Hours of Work, further defines managerial employees as follows:

“(b) Managerial employees [are those who] meet all of the following conditions:

(1) Their primary duty consists of the management of the establishment in which they are employed or of a department or sub-division thereof.

(2) They customarily and regularly direct the work of two or more employees therein.

(3) They have the authority to hire or fire employees of lower rank; or their suggestions and recommendations as to hiring and firing and as to the promotion or any other change of status of other employees, are given particular weight.”

c. Labor Code – Book Five, Title I

In the Labor Code, Book Five – Labor Relations, Title I – Policy and Definitions, Chapter I – Policy, defines managerial employees as follows:

“(m) ‘Managerial employee’ is one who is vested with the powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees.”

Book Five, Title I, discusses the rules on right to self-organization, labor organizations, legitimate labor organizations, bargaining unit, bargaining representative, unfair labor practice by the employer, unfair labor practice by labor organizations, collective bargaining, collective bargaining agreement (CBA), among others. Managerial employees are exempted or excluded from these provisions.

d. Omnibus Rules Implementing the Labor Code – Book Five

Under the Omnibus Rules Implementing the Labor Code, Book Five – Labor Relations, Rule I – Definition of Terms, similarly defines managerial employees as follows:

“(o) ‘Managerial Employee’ is one who is vested with powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, layoff, recall, discharge, assign or discipline employees.” (Section 1)

Book III, Title I, discusses the rules on normal hours of work – i.e. 8-hour work day, 48-hour workweek, compensable working time, meal periods, night shift differential, overtime work, overtime pay, weekly rest periods, premium pay, service incentive leave, service charges, among others. Managerial employees are exempted or excluded from the coverage of these benefits.

3. Security of tenure

Managerial employees enjoy security of tenure and the right of the management to dismiss must be balanced against the managerial employee’s right to security of tenure, which is not one of the guaranties he gives up. (Continental Micronesia, Inc. v. Basso, G.R. Nos. 178382-83, 23 September 2015)

a. Foreign managers

In a case involving a U.S. corporation and a U.S. citizen (the complainant) who was offered the position of General Manager of the Philippine Branch of the company, notwithstanding that the employment contract signed was sent from the U.S. and already signed by the company’s authorized representative, and which was subsequently signed and returned by the complainant, it was held that the foreign manager was covered by the security of tenure under Philippine labor laws invalidating the termination-at-will provision, which is void in this jurisdiction. (Ibid.)

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References

▪ P.D. 442, Labor Code of the Philippines

▪ Book III, Omnibus Rules Implementing the Labor Code

▪ Book V, Omnibus Rules Implementing the Labor Code