No specific minimum number of years

This is a continuation of my article titled, Prohibition against elimination or diminution of employee benefits (August 12, 2013), where I explained the non-diminution of benefits rule.

In order to have a clear grasp of the topic, I will incorporate the pertinent portions of this article 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.

Company practice

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.

No specific minimum number of years

There is no specific minimum number of years that needs to be met first in order that the giving of benefits not required by law may be deemed to have ripened into a company practice.

Our jurisprudence has not laid down any rule requiring a specific minimum number of years. Decided cases

In Davao Fruits Corporation vs. Associated Labor Unions, the company practice lasted for six (6) years.

In Davao Integrated Port Stevedoring Services vs. Abarquez, the employer, for three (3) years and nine (9) months, approved the commutation to cash of the unenjoyed portion of the sick leave with pay benefits of its intermittent workers.

In Tiangco vs. Leogardo, Jr., the employer carried on the practice of giving a fixed monthly emergency allowance from November 1976 to February 1980, or three (3) years and four (4) months.

In Sevilla Trading Company vs. A.V.A. Tomas E. Semana, Sevilla Trading Workers Union-Super, the employer kept the practice of including non-basic benefits such as paid leaves for unused sick leave and vacation leave in the computation of their 13th-month pay for at least two (2) years.

In all these cases, the Supreme Court held that the grant of these benefits has ripened into a company practice, which the employer can no longer unilaterally eliminate or diminish.

[Reference: 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 February 18, 2014]

 

One thought on “No specific minimum number of years

  1. Hi Attorney,

    When I was hired by my current employer in 2014, I was provided non-taxable 14th month pay as part of the compensation package (and clearly stipulated in the contract). I’ve received it once already, last year. Recently, some of my officemates told me that the company had decided to add the said benefit to the basic pay by splitting it into 12, thus making it tax-deductible. Doesn’t this violate the non-dimunition principle? Thanks in advance for any advice on this.

    Like

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