The Law and Best Practices for On-The-Job Training Part 2

All of the practical training programs mentioned last week in Part 1 do not make a trainee an employee. This is crucial because only employer-employee relationships are regulated by certain provisions of the Labor Code. Hence, trainees are not entitled to security of tenure, the right to form union and the mandatory employee benefits. They are however entitled to the observance of occupational safety and health standards.

Practical Example

To understand the legal ramifications of the difference between an employee and a trainee, let us take the case of Century Canning Corp v Court of Appeals and Palad. In that case, Gloria was accordingly hired as an apprentice under an apprenticeship agreement duly signed by Gloria.[1] However, such apprenticeship agreement was only approved by the Technical Education and Skills Development Authority (TESDA) 2 months after its signing and implementation.[2] Upon evaluation 4 months from the time of implementation of the apprenticeship agreement, it was concluded that Gloria “needs improvement” and was consequently dismissed.[3] Gloria however alleged that she was a regular employee and she had been irregularly and illegally dismissed by the company. Furthermore, she claimed that there had been an underpayment of her wages and non-payment of her 13th month pay.[4]

The root of their contention is whether Gloria was a regular employee or an apprentice, given that the apprenticeship agreement was only approved by the proper government regulatory agency 2 months after its signing and implementation. If it should be decided that she was an apprentice, she can be dismissed for failing to reach the company standards as stated in the apprenticeship agreement. Furthermore, the company shall only be liable for 75% of the statutory minimum wage.[5] If it should be decided however that Gloria was a regular employee, she can only be dismissed for just and authorized causes under the Labor Code.[6] Furthermore, the employer would be liable to pay the statutory minimum wage.[7]

The Supreme Court ultimately held that the apprenticeship agreement which Palad signed was not valid and binding because it was executed more than two months before the approval of TESDA was secured.[8] Henceforth, Palad should be considered as a regular employee entitled to all the benefits guaranteed by the Labor Code including the security of tenure and the payment of the statutory minimum wage.[9] In this case however, she was not dismissed for a just or authorized cause but for failure to meet an alleged company standard which is of doubtful authenticity to begin with.[10] Furthermore, granting that she indeed failed to meet the performance standard maintained by the company, it was still found that she was not dismissed in accordance with the procedure guaranteed by the Labor Code.[11]

Lesson

The obvious moral lesson of the cited case is to have practical training agreements preapproved by the proper government regulatory agency before its signing and implementation. Going deeper however, the result of the case is not just a by-product of a mere lapse of thought or carelessness. It is a consequence of a flawed internal human resource system. Recruitment and selection of employees and trainees is too important of an affair with far-reaching repercussions to be reckless for. The negligence of an employer in engaging employees and trainees without the proper documentary requirements is a reflection of a faulty human resource system.

Note that there are various forms of practical training programs with different terms to choose from. Furthermore, if the employer is still uncertain of the qualifications of the employee for the job, there is always an option to engage an employee on a probationary status. This will allow the employer to properly assess the skill set and work attitude of an employee for a period of 6 months.[12] In the case cited, had the employer engaged the employee on a probationary status instead of an apprenticeship agreement, it would have allowed the employer to terminate the employee based on the failure of the latter to meet the company standards as provided for by the contract even without the approval of any government agency[13]. This goes to show how crucial it is to bind human resource policies with legal precepts.

References:

[1] Century Canning Corp v Court of Appeals and Palad, G.R. No. 152894 (2007).

[2] Id.

[3] Id.

[4] Id.

[5] Art 62, , PD442.

[6] Id. Art. 279.

[7] Id. Art 99.

[8] Century Canning Corp v Court of Appeals and Palad, G.R. No. 152894 (2007).

[9] Id.

[10] Id.

[11] Id.

[12] Art 281, PD 442.

[13] Id.

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ABOUT THE AUTHORS

Christian Andrew L. Gallardo is a graduating student of the Ateneo Law School. He will take the bar in 2020.

You may reach him at andrew.gallardo@paladinslaw.org

Atty. Apollo X.C. S. Sangalang is a labor lawyer and employment attorney based in Quezon City, Philippines and Founding Partner of Sangalang & Gaerlan, Business Lawyers.

From 2003 to 2006 he was the executive director of the National Labor Relations Commission, under the Department of Labor and Employment, and also worked for the Philippine Senate, the Supreme Court and the University of the Philippines.

He has facilitated several training workshops and seminars on labor and business law, and also hosts a weekend program on DZRJ-AM.

You may reach him at pol.sangalang@paladinslaw.org