Can an Employee Choose his Date of Retirement?

Date of Effectivity of Retirement

Marcelino Magdadaro, Petitioner vs. PNB, Respondent, July 17, 2009

Quick Facts: Marcelino A. Magdadaro (petitioner) was employed by Philippine National Bank (respondent) since 8 January 1968.  On 21 September 1998, petitioner filed his application for early retirement under the Bank’s Special Separation Incentive Program (SSIP).  Employee Magdadaro was then holding the position of Senior Assistant Manager of PNB’s Branch Operations and Consumer Finance Division for the Visayas.  Magdadaro stated in his application that 31 December 1999 was his preferred effective date of retirement.

PNB approved his application for early retirement but made it effective on 31 December 1998.  Magdadaro protested the acceleration of his retirement.  He received, under protest, his retirement and separation benefits amounting to P908,950.44.  On 18 October 1999, Magdadaro, after having been retired, and not satisfied with his date of retirement, filed a complaint for illegal dismissal and payment of moral, exemplary and actual damages…

The Decision

The Supreme Court decided, and here are excerpts:

Retirement is the result of a bilateral act of the parties, a voluntary agreement between the employer and the employee whereby the latter, after reaching a certain age, agrees to sever his or her employment with the former. Retirement is provided for under Article 287 of the Labor Code, as amended by Republic Act No. 7641, or is determined by an existing agreement between the employer and the employee.

In this case, PNB offered the SSIP to overhaul the bank structure and to allow it to effectively compete with local peer and foreign banks.  SSIP was not compulsory on employees.  Employees who wished to avail of the SSIP were required to accomplish a form for availment of separation benefits under the SSIP and to submit the accomplished form to the Personnel Administration and Industrial Relations Division (PAIRD) for approval.

Employee Magdadaro voluntarily availed of the SSIP.  He accomplished the application form and submitted it to the PAIRD.  He only questioned the approval of his retirement on a date earlier than his preferred retirement date.

The Labor Arbiter ruled that the employee was not illegally dismissed from the service.  Even the NLRC ruled that Magdadaro could no longer withdraw his application for early retirement under the SSIP.  However, the NLRC ruled that the Bank could not accelerate the Magdadaro’s retirement date.  The NLRC ruled that it could not imagine how petitioner’s continued employment until 31 December 1999 would impair the delivery of bank services and attribute bad faith on respondent when it accelerated petitioner’s retirement.

The Supreme Court does  not agree: .   Whether Magdadaro’s early retirement within the SSIP period will improve or impair the delivery of bank services is a business decision properly within the exercise of management prerogative.  More importantly, the SSIP provides:

7.    Management shall have the discretion and prerogative in approving the applications filed under the Plan, as well as in setting the effectivity dates for separation within the implementation period of the Plan.

It is clear that it is within Bank’s prerogative to set the date of effectivity of retirement and it may not be necessarily what is stated in the application.  We see no grave abuse of discretion on the part of respondent in the exercise of this management prerogative.  The exercise of management prerogative is valid provided it is not performed in a malicious, harsh, oppressive, vindictive or wanton manner or out of malice or spite. In this case, the NLRC’s finding that petitioner received a rating of 70.5% in his working and business relations is not enough reason to ascribe bad faith on the part of respondent in accelerating the date of effectivity of petitioner’s retirement.

2009 Latest Supreme Court Rulings in Labor

Management Rights’ Affirmation to Transfer Place of Work

Gualberto Aguanza, Petitioners vs. Asian Terminals Inc., et al, Respondents, August 14 2009

Quick Facts: Petitioner Gualberto Aguanza was employed with respondent company Asian Terminal, Inc. from April 15, 1989 to October 1997.  He was initially employed as Derickman or Crane Operator and was assigned as such aboard Bismark IV, a floating crane barge owned by Asian Terminals, Inc. based at the port of Manila.

As of October 1997, he was receiving the following salaries and benefits from [ATI]:

c. Fixed overtime pay of 16 hours when the barge is assigned outside Metro Manila;

d. P260.00 per day as out of port allowance when the barge   is assigned outside Manila.

Sometime in September 1997, the Bismark IV, together with its crew, was temporarily assigned at the Mariveles Grains Terminal in Mariveles, Bataan.

On October 20, 1997, Manager James Keith issued a memo to the crew of Bismark IV stating that the barge had been permanently transferred to the Mariveles Grains terminal beginning October 1, 1997 and because of that, its crew would no longer be entitled to out of port benefits of 16 hours overtime and P200 a day allowance.

[Aguanza], with four other members of the crew, stated that they did not object to the transfer of Bismark IV to Mariveles, Bataan, but they objected to the reduction of their benefits.

When they objected to the reduction of their benefits, they were told by James Keith to report to the Manila office only to be told to report back to Bataan.  On both occasions, [Aguanza] was not given any work assignment.

After being shuttled between Manila and Bataan, [Aguanza] was constrained to write respondent Atty. Corvite for clarification of his status, at the same time informing the latter of his willingness to work either in Manila or Bataan.

While he did not agree with private respondents’ terms and conditions, he was nonetheless willing to continue working without prejudice to taking appropriate action to protect his rights.

Because of the Company’s refusal to give him any work assignment and pay his salary, [Aguanza] filed a complaint for illegal dismissal against respondents.

On the other hand, the ATI Company claims that:

[Aguanza] was employed by [ATI] on February 1, 1996 as a Derickman in Bismark IV, one of the floating crane barges of [ATI] based in the port of Manila.  In 1997, [ATI] started operation at the Mariveles Grains Terminals, Mariveles, Bataan.  Beginning October 1, 1997, Bismark IV including its crew was transferred to Mariveles.  For their transfer, [ATI] offered the crew the following:

“I am asking you to reply to me by the 31st October 1997 if you wish to be transferred to Mariveles under the following salary conditions:

-        regular 40-hour duty Monday to Friday

-        overtime paid in excess of 8 hours/day

-        overtime paid on Saturdays and Sundays

-        no additional allowance

-        no transportation”

By way of reply to the memorandum, [Aguanza] along with all the members of the crew of Bismark IV namely: Rodrigo Cayabyab, Wilfredo Alamo, Eulogio Toling, Jonathan Pereno, Marcelito Vargas, Erwin Greyblas and Christian Paul Almario (crew member Nestor Resuello did not sign the said letter) answered through an undated letter, to wit:

“We used to receive the following whenever we are assigned out of town.

1)  P200.00 a day allowance

2)  P60.00 per day food allowance

3)  16 hours per day fixed overtime

We have been receiving this [sic] compensation and benefits whenever we are assigned to Bataan. x x x”

They asserted that they have no objection to their assignment in Mariveles, Bataan but on the former terms and conditions.

Eventually, the other members of the crew of Bismark IV accepted the transfer and it was only [Aguanza] who refused the transfer.

On November 12, 1997, [Aguanza] wrote the company asserting that he did not request his transfer “to Manila from Mariveles.”  He stressed that he was willing to be assigned to Mariveles so long that there is no diminution of his benefits while assigned to Mariveles, which meant, even if he was permanently based in Mariveles, Bataan, he should be paid 24 hours a day – 8 hours regular work and 16 hours overtime everyday plus P200.00 per day allowance and P60.00 daily food allowance.

[Aguanza] insisted on reporting to work in Manila although his barge, Bismark IV, and its other crew were already permanently based in Mariveles, Bataan.  [Aguanza] was not allowed to time in in Manila because his work was in Mariveles, Bataan.

In [Aguanza]’s appointment paper, [Aguanza] agreed to the following conditions printed and which reads in part:

“That in the interest of the service, I hereby declare, agree and bind myself to work in such place of work as ATI may assign or transfer me.  I further agree to work during rest day, holidays, night time or other shifts or during emergency.”

The Rulings:

Labor Arbiter: Illegal Dismissal

NLRC: Out of town benefits unreasonable

Court of Appeals: The fixed overtime of 16 hours, out-of-port allowance and meal allowance previously granted to [Aguanza] were merely supplements or employment benefits given under a certain condition, i.e., if [Aguanza] will be temporarily assigned out-of-port.  It is not fixed and is contingent or dependent of [Aguanza’s] out-of-port reassignment.  Hence, it is not made part of the wage or compensation.

This Court also finds utter bad faith on the part of [Aguanza]. [Aguanza] claims that he does not contest his permanent reassignment to Mariveles, Bataan and yet he insisted on reporting to Manila.  If petitioner had only been sincere to his words, he would have reported to Mariveles, Bataan where his work is, and in compliance with the employment contract with [ATI].

There was no illegal dismissal since it was [Aguanza] who refused to report to Mariveles, Bataan where he was assigned.

The Supreme Court Decision

Aguanza asserts that his transfer constituted constructive dismissal, while ATI asserts that Aguanza’s transfer was a valid exercise of management prerogative.

The Supreme Court agreed with ATI Company.

ATI’s transfer of Bismark IV’s base from Manila to Bataan was, contrary to Aguanza’s assertions, a valid exercise of management prerogative.  The transfer of employees has been traditionally among the acts identified as a management prerogative subject only to limitations found in law, collective bargaining agreement, and general principles of fair play and justice.  Even as the law is solicitous of the welfare of employees, it must also protect the right of an employer to exercise what are clearly management prerogatives. The free will of management to conduct its own business affairs to achieve its purpose cannot be denied.

On the other hand, the transfer of an employee may constitute constructive dismissal “when continued employment is rendered impossible, unreasonable or unlikely; when there is a demotion in rank and/or a diminution in pay; or when a clear discrimination, insensibility or disdain by an employer becomes unbearable to the employee.”

Aguanza’s continued employment was not impossible, unreasonable or unlikely; neither was there a clear discrimination against him.  Among the employees assigned to Bismark IV, it was only Aguanza who did not report for work in Bataan.  Aguanza’s assertion that he was not allowed to “time in” in Manila should be taken on its face: Aguanza reported for work in Manila, where he wanted to work, and not in Bataan, where he was supposed to work.

When ATI transferred Bismark IV’s operations to Bataan, ATI offered Aguanza similar terms:  basic pay for 40 hours of work from Monday to Friday, overtime pay for work done in excess of eight hours per day, overtime pay for work done on Saturdays and Sundays, no additional allowance and no transportation for working in Bataan.  The circumstances of the case made no mention of the salary structure in case Bismark IV being assigned work outside of Bataan; however, we surmise that it would not be any different from the salary structure applied for work done out-of-port.  We, thus, agree with the NLRC and the appellate court when they stated that the fixed overtime of 16 hours, out-of-port allowance and meal allowance previously granted to Aguanza were merely supplements or employment benefits given on condition that Aguanza’s assignment was out-of-port.  The fixed overtime and allowances were not part of Aguanza’s basic salary.  Aguanza’s basic salary was not reduced; hence, there was no violation of the rule against diminution of pay.

Are you paying OT for travel to regional or field postings?

Don’t.  I’ve seen numerous companies paying overtime for employees who travel from field or regional locations. While it may be generous, OT for travel may encourage employees to push their travel period later and later even as they can maximize their time and travel without incurring OT expenses.

What’s the logic in paying OT for travel to field locations and coming back to head office? It’s like paying your employees going to office and going home daily?

Ok, ok, those may be two different situations but from an economic, value-adding perspective, why pay OT for time that does not really add real value?

Remember as a general rule, if the Labor Code  does not provide for an obligation, which means it does not oblige OT payments or exact time-input payments for hours dedicated to travel then you may either ignore or make your own fair rule. In the meantime that the law is not specific on travel allowance, you may formulate instead a table of allowances for travel outside of Metro Manila or outside of the employee’s base. The table may take into account distance or time involved in travel outside of base. The allowance may be lower than actual OT so that the enterprise may save just a little bit while not shortchanging the employee. The basis for the allowance may be average time or concentric distance to main office or base.

This is a legal definition of hours worked. The travel allowance will certainly be valid and logical based on this definition of work hours.

The number of hours actually spent by a worker at work including waiting time, time spent in the preparation of the workplace, repairs and maintenance, preparation and cleaning of tools, short rest periods, and overtime. Excluded are time paid for but not spent in work for the establishment such as sick-leave, paid vacation leave and the like, and travel time to and from place of work.

to continue…

Best Practices in Valid Work Rules

Best practices when formulating and building up your own Code of Conduct is to start with the owner’s vision of HR roles and behaviors among employees. It will be hard to complete your code in one sitting. See it as a work-in-progress.

When i made my company’s Code of Conduct, I made sure the rules covered behaviors that may frequently occur, violations that are common in the industry, and violations that are serious– those that merit termination. All the others that I failed to anticipate, I just added memos, and built them into the code. So far, the rules number close to a hundred now.

And then I found out, it’s not in the number of rules, it’s in the consistent and strict application of these rules.

My due process day is Monday of every week, and if there are no cases to hear, it means that my Monday is free and that there are no violations. So far i have taken a few vacations but I can sense somehow that these rules are working. Employees know it by heart. And the rules also strike fear in their hearts.

To make for valid and effective work rules, you may try to include the following elements:

a.) Rules as formulated should have proper and sufficient objectives or reasons for such.

Example 1: All rules pertaining to absences and tardiness have the objective of exacting what is just fair to the company and to others.  When you absent yourself, you are actually shortchanging the company by “stealing” time away from it.  Also, it is unfair to others who come on time and get paid for it, while you deliberately get yourself late, and not expect a penalty.

Example 2: Spitting on floors, walls and other places other than the proper receptacles.  Being a food company, commission of this violation as described or on products or raw materials we use as well as on production and treatment facilities and equipment shall warrant immediate dismissal.

b.) Rules as formulated should have corresponding penalties.

Example:

1. Reporting to work having drunk or imbibed alcoholic or any prohibited substance.  Penalty or corrective action: First offense: Employee sent home, absence for the day shall be without pay.  (Then specify progressive discipline)
2. Failure to punch or swipe timecard.

Penalty/Table of Recommended Penalties/ Maximum Penalties

First offense	Second Offense	Third Offense	Fourth Offense	Fifth Offense
Oral counseling	Written Reprimand with counseling	1-3 days suspension	4-7 days suspension	Classified as serious offense; Dismissal

c.) Rules  should be presented in an orderly fashion, through a classification of related acts.

Example 1: Table of Contents of Rules and Regulations

1. Violation of Safety and Security Measures
   1. Leaves, Attendance and Tardiness (absence without permission, late)
   2. Negligence, Loafing or Loitering (deadlines, abandoning work, going home early)
   3. Acts of Dishonesty (falsifying of cards; punching another’s card)
   4. Disorderly Conduct (sleeping, drunkenness, bad mouthing, gambling, fighting)
   5. Disregard of Authority or Insubordination (disrespect, discourtesy, failure to obey direct instructions)
   6. Other related acts

Example 2: Table of Contents of Work Rules

1. Attendance and Work Attitude
2. Quality and Quantity of Work
3. Health and Safety Equipment and Regulations
4. Political and Other Activities
5. Specific Departmental Rules and Regulations

d.) They can also be presented according to a classification of offense and penalties

Illustration: Light Offenses (Warning through Suspension), Moderate Offenses (Suspension through Dismissal), Major or Serious Offenses (Outright Termination)

e.) Incidents of violation should have clearing period or prescription period.

This means that certain occurrences of violations can be erased given a time period– that a previous violation which has expired can not progress to a heavier penalty but start with the lightest penalty again.  Records are physically kept in the 201 file but should not be considered for imposition of progressive penalties accruing to a similar offense.

Example: Insubordination or willful disobedience of reasonable requests of supervisor or management staff, including refusal to accept work assignments, within a five-year period.

The clearing period may start on a calendar date (i.e. calendar year, from Jan. 1999 to Dec. 2003), or a fiscal date, the date when an offense is first committed (i.e. fiscal year starts on May 13, 1999, the date of first offense, ends on May 12, 2003, five years after).  Another type is a called a floating period (e.g. within the last 12 months).

f.) Rules must have proper and clear treatment for multiple offenders, or multiple offenses.

Illustration 1: Dismissal for any 5 accumulated disciplinary actions, related or unrelated within the last 12 months.

Illustration 2: General rule: If one incident involving one person results in two violations, the one that exacts a greater penalty will be imposed.

g.) Rules must anticipate some forms of extreme variations or consequences, and specify penalties

Illustration: Abandoning work station without permission.  1st Offense: 3-6 days suspension.  Immediate termination if it results to serious disruption of operations or damages to company property worth more than P50,000.00

h.) May present rules in a positive manner

Illustration: You are expected to show and display proper decorum when in uniform, when driving any of the company vehicles (marked with logo or not), or when introducing yourself as an employee of the company.  Proper decorum requires that you behave in a respectful and decent manner at all times, in front of clients, co-workers, superiors and guests.

Effective Disciplinary Systems: Characteristics

Mature companies have advanced disciplinary systems, integrated with other aspects of managing the business like promotions, rewards and incentives sub-systems. Your company need not be huge and mature to have an effective disciplinary system. Just make sure that it has basic elements that conform with the requirements of the Labor Code. The following characteristics mirror requirements and good practices as reinforced by decisions of the Supreme Court.

Publish rules. Orient employees. Rules must be meaningfully communicated.

• Employees are continuously and positively reminded of policies, rules and regulations.  This is a most basic characteristic, which is also a legal requirement—that rules must be communicated to all employees.  The logic is that how can anybody violate a rule that he does not know exists.  Contrast this with the principle “ignorance of the law excuses no one”—this presumes that the law has been published prior to its enforcement.  Enforcement of rules in the workplace exacts a higher requirement, the burden is on the employer to prove that the employee has been informed of rules.

Do not discriminate. Enforce rules  in a consistent and uniform manner. Implement decisions speedily.

• This is one common weakness among supervisors and managers—the belief that just like most areas of management they can impose their own management or leadership style when implementing discipline.  Such differing styles of enforcing rules lead to charges of laxity, favoritism and inefficacy while also giving rise to employees’ sustainable legal charges of discrimination.  This is one area where every management representative must be consistent.  Also, decisions are handed down immediately to avoid charges of delay and “sitting on it”.

Implement actual investigation. Collect actual proof of wrongdoing. Confront employee before imposing discipline.

• More than just being concerned with legal requirements, this is also a logical one.  Management must show proof of a wrongdoing, and not for the employee to prove that he/she is innocent.

During the due process weigh extenuating or mitigating circumstances  vs. aggravating circumstances. Arrive at fair  decisions. Formulate reasonable penalties.

• It is a rule that given the same violation, there should be similar penalties but what if there are other circumstances.  Most companies with good disciplinary systems take into account these circumstances when imposing discipline.

Implement corrective or progressive discipline.

• Rules are clearly spelled out between minor and major offenses.  Employees who commit minor offenses are considered “rehabilitable”.  Depending on the objectives of the organization, some behaviors are seen as not so critical which when exhibited merit lesser penalties.  They impose progressively heavier penalties, from oral warning, to written warning to varying days of suspension until finally termination is inevitable.

Employ other behavioral interventions– counsel, coach, correct behaviors among errant employees.

• To show that the company has a human face, employees who have committed minor violations are subjected to counseling or coaching interventions.  Their performance at work is constantly monitored, not to evoke compliance but to motivate them to reform.

Observe due process at all times.

• If there is one area where most companies are weak at when imposing discipline and termination, this is in relation to due process.  There are minimum legal requirements in relation to due process.  These must be observed at all times. Look at Art. 282 of the Labor Code. (see my posting on this!)

Put an appeals system in place.

• Because of imperfections in due process, an appeals system allows the company to perfect the requirements of due process.  The employee is given a chance to elevate his/her case before a higher body (e.g. HR manager or Disciplinary Committee) who may be seen as more objective, and less detached in relation to the case.  Although it may delay the process of implementing rules, it allows the employee an internal recourse—a chance to be heard another time if he/she was not convinced the first time of the charges against him/her.  This lessens the probability of the employee lodging a case of illegal dismissal in court.

Extensively document all substantive and procedural disciplinary matters.

• Sometimes management disregards documentation of its disciplinary processes because of numerous factors.  When the case reaches the courts, the arbiter has no other recourse but to side with the employee because the employer must have the burden of proof.  How can the company prove the employee’s wrongdoing without extensive documentation?  It may also be good for management to  have a centralized database system for disciplinary information. Management should also compel supervisors  to document all cases properly.

How do you terminate employment of problem employees?

Employment Relations Rule

Once employed, the employee is presumed to have acquired job and employment security and he/she can not be removed by dismissal or termination unless for just and authorized causes. To a lesser degree, even suspension without due process is illegal as this may be considered “breach” of the employment contract between the employer and the employee.

HR Philosophy

The right to discipline is a Management right. Instilling discipline, forming desirable and productive behaviors and norms in the Company must stem from a clear Company Philosophy.

Just like most HR management functions, the duty to discipline is a line function, wielded by shopfloor supervisors and line managers. The responsibility to discipline when used effectively enhances the leadership skills and credibility of the supervisor and manager.

This is the Labor Code’s provision on just cause termination. We may simply define just cause termination as “employer initiated termination because of employee’s fault.” Art 282 provides for employer’s legitimate bases for initiating termination procedures– the substantive due process.

Art. 282.  Termination by employer.—An employer may terminate an employment for any of the following causes:

a)      Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work;

b)      Gross and habitual neglect by the employee of his duties;

c)      Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative;

d)      Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representative; and

e)      Other causes analogous to the foregoing.

The how of termination is called procedural due process and the steps are provided in the Labor Code’s Implementing Rules: Book V, Rule XXIII.

Sec. 2. Standards of due process; requirements of notice. – In all cases of termination of employment, the following standards shall be substantially observed:

1. For termination of employment, the following standards on just causes as defined in Art. 282 of the Code:

• • A written notice served on the employee specifying the ground or grounds for termination, and giving to said employee reasonable opportunity within which to explain his side;
  • A hearing or conference during which the employee concerned, with assistance of counsel if the employee so desires, is given opportunity to respond to the charge, present his evidence or rebut the evidence presented against him; and
  • A written notice of termination served on the employee indicating that upon due consideration of all the circumstances, grounds have been established to justify his termination.

Magulo ba? Masyadong matindi legalese?

Simple lang, i-summarize ko:

1. Dapat may rules ka on proper, restricted, regulated and prohibited behaviors for all employees. These rules must be applied for all work-related situations and circumstances. (see my entry on valid work rules.)
2. Publish these rules. Be sure to have proof that all employees regardless of employment status have been oriented regarding these rules.
3. When information of violation reaches you as superior of a subordinate, do an initial investigation.
4. The results of the initial investigation should give you an idea if the employee violated a rule. Parang probable cause ito sa korte.
5. Write the first notice as as described above. Some companies call this the “show cause” notice. I call it simply first notice. Better— charge notice.
6. Conduct the due process hearing. Tatlo yung role mu as boss– investigator, prosecutor, and judge. Be careful not to confuse your roles in front of the employee.
7. After the hearing, inform the employee when the decision regarding his case may be expected.
8. Best to arrive at a decision within a week after the first report of violation reached your office;  or days after your due-process hearing.
9. If your decision is to terminate, best to serve the notice to the employee before the end of office/work day, and to make sure that he clears his table as he will not be reporting back anymore.

Rules & more rules on holiday pay!

Dahil sa dami ng classification ng days aside from working days, like rest days, non-working holidays, national holidays, local holidays, regular and special working holidays, once again the DOLE has issued guidelines on how to treat the upcoming holidays for November.  Read on:

DOLE says there are five upcoming holidays this November to  include All Saints’ Day [Nov. 1], All Souls’ Day [Nov. 2[, Eid'l Adha [Nov. 27 and 28] and Bonifacio Day on Nov. 30. All Saints’ and All Souls’ Days are special non-working days while Eid’l Adha is a national holiday. Bonifacio Day is a regular holiday.

For November 1 and 2, the pay rules for special non-working days apply as follows:

* If worked, the employee is entitled to 130 percent of his [or her] daily rate for the first 8 hours, and to an additional 30 percent of his or her hourly rate on the said day for work performed in excess of 8 hours;

* If unworked, he or she is not entitled to any payment, unless there is a favorable company policy, practice or collective bargaining agreement (CBA) granting payment for special days even if not worked;

* If worked and falling on the employee’s rest day, the employee is entitled for the first 8 hours to 150 percent of his or her regular daily rate, and for work performed in excess of 8 hours, plus 30 percent of his or her hourly rate on the said day.

Over the weekend (Oct 31) Malacanang took away the national application of holidays for November 27 and 28 (Eid’l Adha), and November 30, 2009 (Bonifacio Day) making it a regional holiday for the autonomous regions of muslim mindanao.

Fit Teambuilding Services

Teambuilding has taken a bum rap!!!

This OD  intervention for organizations must be one of the most abused concepts in training and development in the Philippines. When organizations need an excuse or a shallow justification for a company outing, a picnic, a relaxing meeting at company expense, etc., the manager requests for a teambuilding activity.

Loosely taken, the teambuilding concept is applied to any unstructured get-together for an organizational unit just so it can justify a budget for an ordinary meeting, picnic, or a relaxing night-out at some beach resort in Batangas or in a nice hotel in the suburbs.  If any, activities in those outings include inappropriate but fun and maybe lewd games, drinking and socialization, unresolved attempts at problem solving, and more drinking.

Seriously speaking, teambuilding interventions in OD (the science of Organization Development) mean  structured activities designed for an organizational unit  1) to improve norms of socialization and working together; 2) for problem solving/resolution of work  issues and concerns; and 3) to welcome new leadership to a new unit.

Since organizational issues are better off diagnosed by outsiders bearing no internal perspectives and biases, teambuilding activities are better facilitated by outsiders. There are numerous consulting companies and freelance consultants competent in providing these services.

Why do you need a Services’ Contractor?

There are several good reasons for getting a service contractor, foremost of which cutting on payroll costs if you have mature company benefits and you cannot afford to provide them to temporary personnel.

In the Philippines, contractors are better known as manpower agencies, which is a misnomer (a wrong label) because contractors are supposed to provide services or implement a job contract. Solely providing manpower would be illegal.

So what would make contracting legal?

Two characteristics make for legitimate contracting. First, the contractor must provide or implement independent services to a principal (i.e. the client). Second, the contractor must be sufficiently capitalized– that it should have its own equipment, machinery, materials, etc. needed to implement or provide those services.

In case you have “illegal” contractors now, is there anyway you could straighten it out?

There would be several ways… You and your contractor may focus on the control test (part of tests to determine if there is an employer-employee relationship) to determine if you control the behavior of these  ”contractual” employees.  The control test is part of the set of employer-employee relationship tests to determine whether the personnel within your premises are employees of your contractor.  Or the same may sue as they may be your employees.