The rule on non-diminution of benefits.

What is the rule on non-diminution of benefits? [1]

The Non-Diminution Rule found in Article 100 of the Labor Code explicitly prohibits employers from eliminating or reducing the benefits received by their employees. This rule, however, applies only of the benefit is based on an express policy, a written contract, or has ripened into a practice.

What constitutes benefits that have “ripened into a practice”? [2]

To be considered as a regular company practice, the employee must prove by substantial evidence that the giving of the benefit is done over a long period of time, and that it has been made consistently and deliberately.

Jurisprudence has not laid down any hard-and-fast rule as to the length of time that company practice should have been exercised in order to constitute voluntary employer practice. The common denominator in previously decided cases appears to be the regularity and deliberateness of the grant of benefits over a significant period of time.

It requires an indubitable showing that the employer agreed to continue giving the benefit knowing fully well that the employees are not covered by any provision of the law of agreement requiring payment thereof.

In sum, the benefit must be characterized by regularity, voluntary and deliberate intent of the employer to grant the benefit over a considerable period of time.

What is the exception to rule on "benefits that ripened into a practice"? [3]

When the practice is due to error in the construction or application of a doubtful or difficult question of law. The error, however, must be corrected immediately after its discovery.

Do the benefits referred to in the rule include non-monetary benefits?

No. As explained by the Supreme Court in Royal Plant Workers Union vs. Coca-Cola: [4]

Let it be stressed that the afore quoted article [Article 100] speaks of non-diminution of supplements and other employee benefits. Supplements are privileges given to an employee which constitute as extra remuneration besides his or her basic ordinary earnings and wages. From this definition, we can only deduce that the other employee benefits spoken of by Article 100 pertain only to those which are susceptible of monetary considerations.

[1] Wesleyan University vs. Wesleyan University Faculty & Staff Association, G.R. No. 181806, March 12, 2014.

[2] Ricardo Vergara Jr. vs. Coca-Cola Bottlers Philippines Inc., G.R. No. 176985, April 1, 2013.

[3] Supra note 1.

[4] Royal Plant Workers Union vs. Coca-Cola Bottlers, Inc., G.R. No. 198783, April 15, 2013.

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