This is a continuation of my articles titled, Prohibition against elimination or diminution of employee benefits, No specific minimum number of years, and Monetary benefits or privileges with monetary equivalents, where I explained the non-diminution of benefits rule.
The first was posted on August 12, 2013, the second on February 18, 2014, and the third on March 1, 2014.
In order to have a clear grasp of the topic, I will incorporate the pertinent portions of these articles here.
Non-diminution of benefits required by law
Employees are entitled to benefits required by law. And employers are obliged to pay them in full.
Employers are given no right to eliminate or diminish them even with the consent of their employees.
Non-diminution of benefits not required by law
By contrast, employees are not entitled to benefits not required by law. And employers may refuse to pay them if so demanded.
Employers may, however, give benefits not required by law to their employees.
But, once given, and when the giving of these benefits has ripened into a company practice, employers can no longer eliminate or diminish them without the consent of their employees, because they are now deemed part of the employment contract even if unwritten.
The giving of benefits not required by law ripens into a company practice when it is done consistently, deliberately, and for over a long period of time.
It becomes a company practice when employers, despite knowing full well that their employees are not legally entitled, continuously give these benefits to them for over a long period of time.
Mistake in the construction or application of a doubtful or difficult question of law
But when the giving of these benefits is due to mistake in the construction or application of a doubtful or difficult question of law, no company practice will ripen, evidently because the giving is not deliberate.
And since no company practice will ripen, there will be no violation of the non-diminution of benefits rule if the employer later decides to correct the mistake by unilaterally eliminating or diminishing these benefits.
Correction of the mistake must be made immediately after its discovery
But the correction of the mistake must be made immediately after its discovery, because, if not, the giving of these benefits will already be considered deliberate.
And if done consistently and for over a long period of time, it will consequently ripen into a company practice, which the employer can no longer unilaterally eliminate or diminish.
[References: Pages 365-369, Volume One, Philippine Labor and Social Legislation Annotated (Revised Edition 1999) by Samson S. Alcantara and Samson B. Alcantara, Jr., Pages 84-87, Everyone’s Labor Code (2007 Edition) by C. A. Azucena, Jr., Pages 207-232, Vol. I, The Labor Code with Comments and Cases (1999 Edition) by C. A. Azucena, Jr., Globe Mackay Cable and Radio Corporation, et. al. vs. National Labor Relations Commission, et. al., G.R. No. 74156, June 29, 1988, Davao Fruits Corporation vs. Associated Labor Unions (ALU), et. al., G.R. No. 85073, August 24, 1993, and Sevilla Trading Company vs. A.V.A. Tomas E. Semana, Sevilla Trading Workers Union-Super, G.R. No. 152456. April 28, 2004/Author’s Note: This was first posted on the Internet on March 13, 2014]