Unfair Labor Practices by an Employer

Employers may be held liable for unfair labor practices if they interfere with their employees right to self-organization.

1. Concept

“Unfair labor practices” – violate the constitutional right of workers and employees to self-organization, are inimical to the legitimate interests of both labor and management, including their right to bargain collectively and otherwise deal with each other in an atmosphere of freedom and mutual respect, disrupt industrial peace and hinder the promotion of healthy and stable labor-management relations. (Article 258, P.D. 442, Labor Code)

2. Employer Unfair Labor Practices

Unfair labor practices may be committed both by the employer under Article 248 and by labor organizations under Article 249 of the Labor Code. (Mendoza v. MWEU, G.R. No. 201595, 25 January 2016)

It shall be unlawful for an employer to commit any of the following unfair labor practices:
1) To interfere with, restrain or coerce employees in the exercise of their right to self-organization;
2) To require as a condition of employment that a person or an employee shall not join a labor organization or shall withdraw from one to which he belongs;
3) To contract out services or functions being performed by union members when such will interfere with, restrain or coerce employees in the exercise of their right to self-organization;
4) To initiate, dominate, assist or otherwise interfere with the formation or administration of any labor organization, including the giving of financial or other support to it or its organizers or supporters;
5) To discriminate in regard to wages, hours of work and other terms and conditions of employment in order to encourage or discourage membership in any labor organization. Nothing in the Labor Code or in any other law shall stop the parties from requiring membership in a recognized collective bargaining agent as a condition for employment, except those employees who are already members of another union at the time of the signing of the collective bargaining agreement. Employees of an appropriate bargaining unit who are not members of the recognized collective bargaining agent may be assessed a reasonable fee equivalent to the dues and other fees paid by members of the recognized collective bargaining agent, if such non-union members accept the benefits under the collective bargaining agreement: Provided, That the individual authorization required under Article 242, paragraph (o) of this Code204 shall not apply to the non-members of the recognized collective bargaining agent;
6) To dismiss, discharge or otherwise prejudice or discriminate against an employee for having given or being about to give testimony under this Code;
7) To violate the duty to bargain collectively as prescribed by this Code;
8) To pay negotiation or attorney’s fees to the union or its officers or agents as part of the settlement of any issue in collective bargaining or any other dispute; or
9) To violate a collective bargaining agreement. (Article 259, Ibid.)

The provisions of the preceding paragraph notwithstanding, only the officers and agents of corporations, associations or partnerships who have actually participated in, authorized or ratified unfair labor practices shall be held criminally liable. (Paragraph 2, Article 259, Ibid.)

a. Interference

1) To interfere with, restrain or coerce employees in the exercise of their right to self-organization; (Article 259, Ibid.)

1) Interrogation of union activities

Subjection by the company of its employees to a series of questionings regarding their membership in the union or their union activities, in such a way as to hamper the exercise of free choice on their part, constitutes unfair labor practice (Philippine Steam Navigation Co. v. Philippine Officers Guild, En Banc, G.R. Nos. L-20667 and 20669, 29 October 1965, citing Scoty’s Department Store vs. Micaller, 52 O.G. 5119).

2) Even before registration of union

An employer may be guilty of ULP in interfering with the right to self-organization even before the union has been registered. (Samhan ng mga Manggagawa sa Bandolino-LMLC v. NLRC, G.R. No. 125195, 17 July 1997)

SAMAHAN NG MGA MANGGAGAWA SA BANDOLINO-LMLC v. NLRC, supra.

⦁ There was evidence to the effect that [M.] Franco had been asked to disclose the names of the members of the union and that the management had shown interest in the unionizing activities of [the Complainants-Employees]. This evidence has remained unchallenged. What is more, it appears that only alleged members of the petitioner union were put on “rotation”. The labor arbiter’s observation during the hearing that [the Company] had shown hostility towards [the Complainants] for their union activities is a determination of fact which is based on the totality of [the Company’s] conduct, indicating anti-union bias. Nor is it disputed that [the Company] opposed [the Complainants’] petition for certification election when this matter should be the sole concern of the workers. [The Company’s] interest belies their claim that they were not aware of [the Complainants’] organizational and union activities prior to the union’s registration. An employer may be guilty of ULP in interfering with the right to self-organization even before the union has been registered.

3) Sending letters to employees

[T]he act of a company president in writing letters to the strikers, urging their return to work on terms inconsistent with their union membership, was adjudged as constituting interference with the exercise of his employees’ right to collective bargaining… It is likewise an act of interference for the employer to send a letter to all employees notifying them to return to work at a time specified therein, otherwise new employees would be engaged to perform their jobs. Individual solicitation of the employees or visiting their homes, with the employer or his representative urging the employees to cease union activity or cease striking, constitutes unfair labor practice. All the above-detailed activities are unfair labor practices because they tend to undermine the concerted activity of the employees, an activity to which they are entitled free from the employer’s molestation. (The Insular Life Assurance Co. Ltd. Employees Association-NATU v. The Insular Life Assurance Co. Ltd., En Banc, G.R. No. L-25291, 30 January 1971)

4) Runaway shop

A “runaway shop” is defined as an industrial plant moved by its owners from one location to another to escape union labor regulations or state laws, but the term is also used to describe a plant removed to a new location in order to discriminate against employees at the old plant because of their union activities. It is one wherein the employer moves its business to another location or it temporarily closes its business for anti-union purposes. A “runaway shop” in this sense, is a relocation motivated by anti-union animus rather than for business reasons. (CEEA v. NLRC, G.R. No. 121315 and 122136, 19 July 1999)

AUTOMOTIVE ENGINE REBUILDERS, INC. v. PROGRESIBONG UNYONG NG MGA MANGGAGAWA SA AER, G.R. Nos. 160138 and 160192, 13 July 2011

⦁ [The Company] engaged in a runaway shop when it began pulling out machines from the main AER building to the AER-PSC compound located on another street on the pretext that the main building was undergoing renovation. Certainly, the striking workers would have no reason to run and enter the AER-PSC premises and to cause the return of the machines to the AER building if they were not alarmed that AER was engaging in a runaway shop.

b. “Yellow dog” contract

2) To require as a condition of employment that a person or an employee shall not join a labor organization or shall withdraw from one to which he belongs; (Article 259, Ibid.)

Requiring an employee to not join a labor organization or withdraw from one to which he belongs as a condition of employment is an unfair labor practice. Such a condition is also known as “yellow dog” contract.

c. Contracting out

3) To contract out services or functions being performed by union members when such will interfere with, restrain or coerce employees in the exercise of their right to self-organization; (Article 259, Ibid.)

Contracting out of services is an exercise of business judgment or management prerogative. Absent any proof that management acted in a malicious or arbitrary manner, the Court will not interfere with the exercise of judgment by an employer. (Bankard, Inc. v. NLRC, G.R. No. 171664, 06 March 2013)

However, contracting out may be an unfair labor practice if it is done for purposes of interfering, restraining, or coercing employees in the exercise of their right to self-organization.

BPIEU-DAVAO CITY-FUBU v. BANK OF THE PHILIPPINE ISLANDS, G.R. No. 174912, 24 July 2013

⦁ The Union… insists that jobs being outsourced to BOMC were included in the existing bargaining unit, thus, resulting in a reduction of a number of positions in such unit. The reduction interfered with the employees’ right to self-organization because the power of a union primarily depends on its strength in number.

⦁ It is incomprehensible how the “reduction of positions in the collective bargaining unit” interferes with the employees’ right to self-organization because the employees themselves were neither transferred nor dismissed from the service. As the NLRC clearly stated:

In the case at hand, the union has not presented even an iota of evidence that petitioner bank has started to terminate certain employees, members of the union. In fact, what appears is that the Bank has exerted utmost diligence, care and effort to see to it that no union member has been terminated. In the process of the consolidation or merger of the two banks which resulted in increased diversification of functions, some of these non-banking functions were merely transferred to the BOMC without affecting the union membership.

⦁ BPI stresses that not a single employee or union member was or would be dislocated or terminated from their employment as a result of the Service Agreement. Neither had it resulted in any diminution of salaries and benefits nor led to any reduction of union membership.

⦁ As far as the twelve (12) former FEBTC employees are concerned, the Union failed to substantially prove that their transfer, made to complete BOMC’s service complement, was motivated by ill will, anti-unionism or bad faith so as to affect or interfere with the employees’ right to self-organization.

⦁ It is to be emphasized that contracting out of services is not illegal per se. It is an exercise of business judgment or management prerogative. Absent proof that the management acted in a malicious or arbitrary manner, the Court will not interfere with the exercise of judgment by an employer. In this case, bad faith cannot be attributed to BPI because its actions were authorized by CBP Circular No. 1388, Series of 1993 issued by the Monetary Board of the then Central Bank of the Philippines (now Bangko Sentral ng Pilipinas). The circular covered amendments in Book I of the Manual of Regulations for Banks and Other Financial Intermediaries, particularly on the matter of bank service contracts. A finding of ULP necessarily requires the alleging party to prove it with substantial evidence. Unfortunately, the Union failed to discharge this burden.

d. Dominating union

4) To initiate, dominate, assist or otherwise interfere with the formation or administration of any labor organization, including the giving of financial or other support to it or its organizers or supporters; (Article 259, Ibid.)

It is an unfair labor practice for an employer to initiate, dominate, assist or otherwise interfere with the formation or administration of any labor organization, including the giving of financial or other support to it or its organizers or supporters. These acts results in the employer dominating the union, who, in turn, may not be able to promote or pursue the interests and/or rights of their members.

e. Discrimination

5) To discriminate in regard to wages, hours of work and other terms and conditions of employment in order to encourage or discourage membership in any labor organization. Nothing in the Labor Code or in any other law shall stop the parties from requiring membership in a recognized collective bargaining agent as a condition for employment, except those employees who are already members of another union at the time of the signing of the collective bargaining agreement. Employees of an appropriate bargaining unit who are not members of the recognized collective bargaining agent may be assessed a reasonable fee equivalent to the dues and other fees paid by members of the recognized collective bargaining agent, if such non-union members accept the benefits under the collective bargaining agreement: Provided, That the individual authorization required under Article 242, paragraph (o) of this Code204 shall not apply to the non-members of the recognized collective bargaining agent;
6) To dismiss, discharge or otherwise prejudice or discriminate against an employee for having given or being about to give testimony under this Code; (Article 259, Ibid.)

AHS/PHILIPPINES EMPLOYEES UNION [FFW] v. NLRC, G.R. No. 73721, 30 March 1987

⦁ [The NLRC] gravely abused its discretion in concluding that the increase in the area sales quota of union president Leones was not an act of discrimination. The NLRC found the increase in the area sales quota justified by the change in the sales organization. It, however, overlooked a very important and crucial factor: that unlike the other field representatives whose quotas were increased by an average of 98%, that of the union president and vice-president were increase 400% and 300%, respectively. No valid explanation was advanced by respondent company for such marked difference. Considered in the light of the anti-union attitude exhibited by respondent company in transferring union president Leones from the main office in Manila to Cebu when the union was still being organized, and which act was found by the NLRC as constituting unfair labor practice and union-busting in connection with the application for clearance to terminate Leones filed by respondent company, 34 the uneven application of its marketing plan by respondent company is patently an act of discrimination, considered as an unfair labor practice under Art. 249[e] of the Labor Code.

f. Duty to bargain Violation

7) To violate the duty to bargain collectively as prescribed by this Code; (Article 259, Ibid.)

REN TRANSPORT CORP. v. NLRC, G.R. No. 188020 and 188252, 27 June 2016

⦁ Violation of the duty to bargain collectively is an unfair labor practice under Article 258(g) of the Labor Code. An instance of this practice is the refusal to bargain collectively as held in General Milling Corp. v CA. In that case, the employer anchored its refusal to bargain with and recognize the union on several letters received by the former regarding the withdrawal of the workers’ membership from the union. We rejected the defense, saying that the employer had devised a flimsy excuse by attacking the existence of the union and the status of the union’s membership to prevent any negotiation.

⦁ It bears stressing that [the employer] Ren Transport had a duty to bargain collectively with [the exclusive bargaining agent] SMART. Under Article 263 in relation to Article 267 of the Labor Code, it is during the freedom period – or the last 60 days before the expiration of the CBA – when another union may challenge the majority status of the bargaining agent through the filing of a petition for a certification election. If there is no such petition filed during the freedom period, then the employer “shall continue to recognize the majority status of the incumbent bargaining agent where no petition for certification election is filed.”

⦁ In the present case, the facts are not up for debate. No petition for certification election challenging the majority status of SMART was filed during the freedom period, which was from November 1 to December 31, 2004 – the 60-day period prior to the expiration of the five-year CBA. SMART therefore remained the exclusive bargaining agent of the rank-and-file employees.

⦁ Given that SMART continued to be the workers’ exclusive bargaining agent, Ren Transport had the corresponding duty to bargain collectively with the former. Ren Transport’s refusal to do so constitutes an unfair labor practice.

⦁ Consequently, Ren Transport cannot avail itself of the defense that SMART no longer represents the majority of the workers. The fact that no petition for certification election was filed within the freedom period prevented Ren Transport from challenging SMART’s existence and membership.

⦁ Moreover, it must be stressed that, according to the labor arbiter, the purported disaffiliation from SMART was nothing but a convenient, self-serving excuse. This factual finding, having been affirmed by both the CA and the NLRC, is now conclusive upon the Court. We do not see any patent error that would take the instant case out of the general rule.

Ren Transport interfered with the exercise of the employees’ right to self-organize.

⦁ Interference with the employees’ right to self-organization is considered an unfair labor practice under Article 258 (a) of the Labor Code. In this case, the labor arbiter found that the failure to remit the union dues to SMART and the voluntary recognition of RTEA were clear indications of interference with the employees’ right to self-organization. It must be stressed that this finding was affirmed by the NLRC and the CA; as such, it is binding on the Court, especially when we consider that it is not tainted with any blatant error. As aptly pointed out by the labor arbiter, these acts were ill-timed in view of the existence of a labor controversy over membership in the union.

⦁ Ren Transport also uses the supposed disaffiliation from SMART to justify the failure to remit union dues to the latter and the voluntary recognition of RTEA. However, for reasons already discussed, this claim is considered a lame excuse that cannot validate those acts.

g. Paid negotiation or attorney’s fees

8) To pay negotiation or attorney’s fees to the union or its officers or agents as part of the settlement of any issue in collective bargaining or any other dispute; (Article 259, Ibid.)

Employers are prohibited from paying negotiation or attorney’s fees to the union or its officers or agents as part of the settlement of any issuing in collective bargaining or any other dispute. Otherwise, this will result in an unfair labor practice.

h. CBA Violation

9) To violate a collective bargaining agreement. (Article 259, Ibid.)

If an employer violates a collective bargaining agreement, this may constitute an unfair labor practice.

3. Liability

[O]nly the officers and agents of corporations, associations or partnerships who have actually participated in, authorized or ratified unfair labor practices shall be held criminally liable. (Paragraph 2, Article 259, Ibid.)

References

Book V, Presidential Decree No. 442, a.k.a. Labor Code of the Philippines

Book V, Omnibus Rules Implementing the Labor Code

DOLE Department Order No. 40, Series of 2003

DOLE Department Order No. 40-A-I, Series of 2003

DOLE Department Order No. 40-B, Series of 2003

DOLE Department Order No. 40-C, Series of 2004

DOLE Department Order No. 40-D, Series of 2005

DOLE Department Order No. 40-F-3, Series of 2008

DOLE Department Order No. 40-G-03, Series of 2010

DOLE Department Order No. 40-I, Series of 2015

DOLE Department Order No. 15, Series of 2015

/Updated: February 11, 2023

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