Library of PH Labor Law

B – Full backwages

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Summary

▪ Full backwages are due to illegally dismissed employees except those who participated in an illegal strike.

▪ It shall be based on wage rate at the time of dismissal.

▪ It consists of all benefits and allowances.

1. Concept

An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. (Article 294, P.D. 442, Labor Code)

a. Wage rate at time of dismissal

Full backwages shall be pegged at the wage rate at the time of the employee’s dismissal, unqualified by any deductions and increases. (Evangelista v. National Labor Relations Commission, G.R. No. 93915, 11 October 1995)

The base figure to be used in reckoning full backwages is the salary rate of the employee at the time of his dismissal. The amount does not include the increases or benefits granted during the period of his dismissal because time stood still for him at the precise moment of his termination, and move forward only upon his reinstatement. (United Coconut Chemicals v. Almores, G.R. No. 201018, 12 July 2017)

NO SALARY DIFFERENTIAL: An unqualified award of backwages means that the employee is paid at the wage rate at the time of his dismissal. Furthermore, the award of salary differentials is not allowed, the established rule being that upon reinstatement, illegally dismissed employees are to be paid their backwages without deduction and qualification as to any wage increases or other benefits that may have been received by their co-workers who were not dismissed or did not go on strike. (Evangelista v. National Labor Relations Commission, supra.)

b. All benefits and allowances

The award shall include the benefits and allowances regularly received by the employee as of the time of the illegal dismissal, as well as those granted under the Collective Bargaining Agreement (CBA), if any. (United Coconut Chemicals v. Almores, G.R. No. 201018, 12 July 2017)

The base figure for the computation of backwages should include not only the basic salary but also the regular allowances being received, such as the emergency living allowances and the 13th month pay mandated by the law. The purpose for this is to compensate the worker for what he has lost because of his dismissal, and to set the price or penalty on the employer for illegally dismissing his employee. (Ibid.)

2. Employees who participated in an illegal strike

a. No backwages

As a general rule, backwages are granted to indemnify a dismissed employee for his loss of earnings during the whole period that he is out of his job. Considering that an illegally dismissed employee is not deemed to have left his employment, he is entitled to all the rights and privileges that accrue to him from the employment. The grant of backwages to him is in furtherance and effectuation of the public objectives of the Labor Code, and is in the nature of a command to the employer to make a public reparation for his illegal dismissal of the employee in violation of the Labor Code. (Olisa v. Escario, G.R. No. 160302, 27 September 2010)

That backwages are not granted to employees participating in an illegal strike simply accords with the reality that they do not render work for the employer during the period of the illegal strike. (Ibid.)

b. Fair day’s wage for a fair day’s labor

With respect to backwages, the principle of a “fair day’s wage for a fair day’s labor” remains as the basic factor in determining the award thereof. If there is no work performed by the employee there can be no wage or pay unless, of course, the laborer was able, willing and ready to work but was illegally locked out, suspended or dismissed or otherwise illegally prevented from working. (G&S Transport Corporation v. Infante, G.R. No. 160303, 13 September 2007)

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References

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

DOLE Department Order No. 147, Series of 2015

▪ Jurisprudence or Supreme Court Decisions

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