Restrictive work contracts

Disputes over employment contracts have been in the news lately. ABS-CBN has gone to court to prevent erstwhile protégé Willie Revillame from hosting a program at rival TV5. The kapamilya network claims he is still under contract until September 2011.

Revillame, on the other hand, says his contractual ties with the company ceased when it failed to give him firm hosting programs.

A dispute over employment terms also hit Philippine Airlines last August in the wake of the sudden resignation of several pilots and first officers.

With uncanny timing, a trial court recently ordered a former PAL pilot to pay the company some P2 million in damages for failure to comply with the terms of the training contract he entered into in 2006.

This is bad news for the 16 pilots and first officers whom PAL sued for abandonment of duty and breach of contract as a result of the August incident.

Developments in these labor disputes are being watched closely by executives in related businesses because of their possible effect on their staffing policies.

A liberal interpretation of the subject employment contracts could be unsettling for employers, but a boon for employees who possess skills the job market needs. If strictly construed, expect grumblings within the labor ranks to get louder.

Restrictions

Conflicts over mandatory employment periods are generally limited to positions that require expertise or skills acquired only through years of specialized education or training.

Employers will not lose sleep over the resignation or disappearance of employees who can be replaced by a quick call to a placement agency or by updating records of job applicants. Considering the country’s double digit unemployment backlog, there is no dearth in replacements for vacancies in unskilled or semi-skilled positions.

But for top-rated workers or those who are too good to lose (especially to competition), employers use various schemes to keep them in their staff.

The standard technique is to tie them down to contracts that bind them to work for a certain number of years that correspond to the equivalent of whatever money the company may have spent for their training or additional education.

If they fail to live up to that commitment, they are obliged to pay the balance of “unpaid” cost of training or education.

This amount is often deducted from whatever separation benefits may be due the employee or, if they are insufficient and the employee refuses to sign a promissory note for the balance, he is haled to court to force payment.

No competition

Another way to discourage employees from leaving is to require them to sign “no competition” contracts that bar them from employment in companies that compete with the business of the former employer, or themselves engaging in a similar business for a certain period, which ranges from one to five years.

A less obtrusive approach is to enter into confidentiality or non-disclosure agreements that prohibit the employee from disclosing to third parties, without the company’s prior approval, any technology, method or procedure the employee may have learned during his employment.

It doesn’t matter if those confidential items were developed or improved upon by the employee himself; chances are the company has obtained a patent over them under its name without the employee’s knowledge.

Any violation of the “no competition” or confidentiality contract may render the employee concerned liable for damages and, if the employer happens to be vindictive, for recovery of profit it thinks it lost on account of the use of the confidential items.

Since these contracts are signed at the company’s behest, they come with all the conditions and restrictions that a lawyer who wants to justify his fees can think of to protect his client’s interests.

Interpretation

In legal parlance, they’re called adhesion contracts, or “take it or leave it” contracts where no changes or adjustments in the terms are allowed by the party who prepared them. Unless the employee has other livelihood options, he has no choice but sign at the dotted line.

If, in the future, the employee wants to sever the employment relationship against the company’s wishes, the contracts can be whipped out to make him change his mind. Or else they will see each other in court.

The reality, however, is no matter how carefully crafted a contract may have been and possible loopholes covered, there is always room to question adhesion contracts.

There is no such thing as “clear and simple” contractual provisions. No word in the contract, including punctuation marks and arrangement of sentences, is immune from being interpreted by a lawyer in a manner that would promote his client’s interests.

Bottom line? The courts have the last say on the issue. In the decision-making process, His Honor is not barred from invoking considerations of compassion or equity in passing upon the validity of restrictive employment contracts. –Raul J. Palabrica, Philippine Daily Inquirer

(For feedback, please write to rpalabrica@inquirer. com. ph)