Are Christmas Breaks Given to Employees Considered Benefits?

Christmas Breaks Given to Employees Can be Considered as Benefits which cannot be unilaterally withdrawn by the Employer under the Principle of Non-Diminution of Benefits

The determination of whether Christmas breaks granted to employees, or any other breaks for that matter, are benefits, is significant under Philippine labor laws, especially in light of Article 100 of the Labor Code of the Philippines, which prohibits diminution of benefits of an employee. Article 100 provides:

“Nothing in this book shall be construed to eliminate or in any way diminish supplements, or other employee benefits being enjoyed at the time of the promulgation of this code”

Such provision is construed as one which prohibits an employer from decreasing or eliminating non-basic benefits provided to its employees through contract or company practice.

When to Apply the Principle of Non-Diminution of Benefits

Benefits granted to employees, to be considered as company practice under the auspices of Article 100 of the Labor Code, and which may not be withdrawn unilaterally by the employer, the grant of such benefits must be supported by the following requisites:

a. It must have been practiced over a long period of time (Davao Integrated Ports Stevedoring Services vs. Abarquez, et. al.,G.R. No. 102132, 19 March 1993Sevilla Trading Co v Semana, G.R. No. 152456, 28 April 2004)

b. It must be given by the company consistently and deliberately (Globe Mackay Cable v. NLRC, G.R. No.82511. 3 March 1992;  Sevilla Trading Co vs Semana, supra.); and

c. It must not be a product of an erroneous interpretation or construction of a doubtful or difficult question of law (Globe Mackay Cable v. NLRC, supra.).

Examples Where Benefits were Withdrawn Illegally

No rules have been laid down by the court regarding the length of time the benefits should have been implemented, in order for it to be considered as company practice that may not be unilaterally withdrawn by the company. However:

a. In the case of Tiangco et al. vs. Hon. Leogardo, G.R. no. 576326, 16 May 1983, the company has been paying their employees a fixed monthly emergency allowance which included non-working days, for three (3) years;

b. In the case of Davao Fruits Corporation vs. Associated Labor Union, G.R. no. 85703, 24 August 1993, the company included in the computation of the thirteenth-month pay of its employees the payment of their sick leave, vacation leaves, maternity leaves, and premium for work on rest days and special holidays for a period of six (6) years.

c. In the case of Sevilla Trading Co. vs. Semana, for a period of two (2) to three (3) years, the company has added overtime and holiday pay, night premium and leave benefits to the base pay in the computation of the thirteenth month pay of its employees. In all of the above cited cases, it was ruled that the benefits provided constituted voluntary employer practice over a long period of time and may no longer be unilaterally withdrawn.

Therefore, if the company has willingly and consistently been giving its employees the benefit of having a Christmas break for an extended period of time (for example, more than two (2) years), such may be considered as company practice that may not unilaterally be withdrawn.

Exceptions to the Rule on Non-Diminution of Benefits, where Benefits may be Withdrawn Unilaterally

The rule regarding the non-diminution of benefits, however, is not absolute. Several cases have been decided by the Supreme Court providing for exceptions. In these cases, the Supreme held, for various reasons, that the removal of certain employee benefits did not amount to a violation of Article 100 of the Labor Code. Thus:

a. The removal of a monthly ration of 200 liters of gasoline and a small tank of liquefied petroleum did not violate the rule regarding non-diminution of benefits in the case of Asis vs. Minister of Labor, G.R. no 58095-95, 15 March 1989. The elimination of said benefits was allowed as it was substituted by an undertaking to reimburse the employee during the period when the benefit was eliminated.

b. The rule will also not apply if there are conditions attached to the giving of the benefit.(Asis vs. Minister of Labor)

Therefore, if the company can provide for a substitute to the benefit being removed with substantially the same value or if it may show that the benefits were conditionally provided, it may be excluded from the sanctions under Article 100 of the Labor Code. 

There is a final exception which, although not stated under the law, will prevent a violation of Article 10 of the Labor Code. The rule provided in Article 100 of the Labor Code prohibits the unilateral diminution or elimination of benefits. If, therefore, both the employer and the employees agree to the removal of the benefit, such will not be considered as a violation of the rule.

About Nicolas and De Vega Law Offices

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