Revising employment contract during company reorganization

Dear PAO,

I have been working for a multinational company in Pasay City for six years. The company recently reorganized, and as a result our job title, positions, duties and responsibilities have changed. Our boss would like us to think that the changes are tantamount to a promotion because our previous positions were dead-end positions, while our current positions give us opportunity to move up in later years. However, we were not given any salary increase. I would like to know if we are entitled to a salary increase and if we are being exploited by our employer.

L. Acuna

Dear Mr. Acuna, 

The present economic conditions draw some people to accept low-paying jobs in order to support themselves and their families. Hence, it is very important to evaluate the contract of employment between the employer and the employee as it governs their employment relationship. It declares the extent of responsibility of the employee, and it conveys the compensation and benefits the employer is mandated to give.

As provided for under Article 1305 of the New Civil Code of the Philippines, “A contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service.” Additionally, “The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy.” (Article 1306, New Civil Code) A contract of employment, like any other contract, has the force and effect of law between the parties. The binding effect of the stipulations therein continues unless and until the same is terminated or is modified by a new contract.

As you have mentioned, you continued working for a company notwithstanding the reorganization it initiated resulting in certain changes in your work responsibilities as well as in your job title. However, you did not mention whether you and the company executed and concluded a new contract of employment due to the aforementioned reorganization. For this reason, we are of the opinion that you are still bound by the same terms and conditions of your existing contract with them. The provisions of your existing contract are carried on despite the reorganization of the company because no new contract was entered into between you and the company. 

Nevertheless, you may seek for the amendment of your contract of employment which would embody such provisions for more appropriate salary and benefits, given the fact that you now have additional job responsibilities. You may negotiate for better working terms and conditions. But we would like to reiterate that you and the company should come to an agreement as to the terms of the new contract since a contract is, after all, a meeting of the minds.

Please be reminded that you have the right to complain from your employer if your salary falls below the minimum wage rate fixed by law. At present, the minimum wage for non-agricultural industries within the National Capital Region is P382.00. The complaint may be filed with the Regional Office of the Department of Labor and Employment having jurisdiction of the workplace, and the basis for the complaint is the employer’s non-compliance with the provisions of Republic Act No. 6727 (Wage Rationalization Act). 

We hope that we were able to answer your queries. Please be advised that this opinion is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated. –Persida AAcosta, Manila Times

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to dearpao@manilatimes.net or via text message (key in: Times dearpao <YOUR QUESTION> and send to 2299).