Strikes and lockouts are powerful tools in labor disputes, but they must be wielded carefully within the bounds of the law. When a strike is declared illegal, the consequences for participating workers can be severe, including potential dismissal. However, even in cases of illegal strikes, Philippine law provides avenues for relief and reinstatement, particularly when employers also engage in unfair labor practices or fail to follow proper procedures.

This case examines the circumstances under which illegally dismissed striking workers can be reinstated and compensated, highlighting the importance of due process, good faith, and the principle of social justice in labor law.

Labor law in the Philippines aims to balance the rights of workers and employers. Strikes and lockouts are recognized as legitimate means for workers and employers to assert their interests, but they are subject to specific legal requirements. An unfair labor practice (ULP) is any act by an employer or a labor organization that violates the rights of employees to self-organization and collective bargaining.

Article 259 of the Labor Code outlines employer ULPs, including interfering with employees’ right to organize, discriminating against union members, and refusing to bargain collectively. Article 260 specifies union ULPs, such as restraining employees in their right to not join a union or violating the duty to bargain collectively.

A strike is an organized work stoppage by employees to protest an employer’s actions or to achieve certain demands. However, for a strike to be legal, it must comply with certain procedural requirements, including:

• Filing a notice of strike with the National Conciliation and Mediation Board (NCMB)
• Obtaining a majority vote of union members in a secret ballot
• Submitting the strike vote to the Department of Labor and Employment (DOLE) at least 7 days prior to the intended strike

If these requirements are not met, the strike may be declared illegal, potentially leading to the dismissal of participating employees. However, the dismissal must still be for just cause and with due process.

Example: Imagine a company fires employees for unionizing. This could be an unfair labor practice, potentially negating the illegality of any strike called in response.

The Reformist Union of R.B. Liner, Inc. went on strike, alleging unfair labor practices by the company. The company countered that the strike was illegal due to non-compliance with procedural requirements. The case wound its way through the labor tribunals, with the Labor Arbiter initially ruling the strike illegal and declaring the participating workers to have lost their employment status.

On appeal, the National Labor Relations Commission (NLRC) affirmed the Labor Arbiter’s decision but allowed reinstatement of the dismissed employees, citing social justice. The union then elevated the case to the Supreme Court.

The Supreme Court’s decision hinged on several key points:

• Compulsory Arbitration: R.B. Liner had previously sought compulsory arbitration to resolve the strike issue. By doing so and entering into an agreement with the union, they waived their right to later contest the legality of the strike.
• Compromise Agreement: The agreement between the company and the union was a compromise, binding on both parties. This agreement had the effect of res judicata, preventing the re-litigation of issues already settled.
• Defiance of Return-to-Work Order: The Court found that the company failed to sufficiently prove that the employees defied the Labor Secretary’s return-to-work order.

As the Supreme Court stated:

“The private respondents can no longer contest the legality of the strike held by the petitioners on 13 December 1989, as the private respondents themselves sought compulsory arbitration in order to resolve that very issue…”

And further:

“The agreement entered into by the company and the union, moreover, was in the nature of a compromise agreement…Thus, in the agreement, each party made concessions in favor of the other to avoid a protracted litigation.”

Ultimately, the Supreme Court granted the petition, awarding the employees full back wages and separation pay, recognizing that reinstatement was no longer feasible.

This case offers several crucial lessons for both employers and employees involved in labor disputes:

• Follow Procedures Carefully: Unions must strictly adhere to the procedural requirements for declaring a legal strike.
• Document Everything: Employers must maintain thorough records to prove just cause for dismissal or any violation of return-to-work orders.
• Compulsory Arbitration is Binding: Seeking compulsory arbitration can have far-reaching consequences, including waiving the right to contest certain issues later.
• Compromise Agreements are Enforceable: Voluntarily entered compromise agreements are binding and can prevent future litigation.

Key Lessons:

• Thoroughly document all actions and communications during labor disputes.
• Understand the binding nature of compulsory arbitration and compromise agreements.
• Employers must prove just cause and due process for dismissing employees, even in illegal strikes.

Hypothetical: If a company locks out union employees without proper notice, and the employees initiate a strike, the company’s illegal lockout could nullify the grounds for declaring the strike illegal.

Q: What makes a strike illegal in the Philippines?

A: A strike is illegal if the union fails to comply with the procedural requirements outlined in the Labor Code, such as filing a notice of strike, obtaining a majority vote, and submitting the strike vote to the DOLE.

Q: Can employees be dismissed for participating in an illegal strike?

A: Yes, but the dismissal must still be for just cause and with due process. The employer must prove the employee’s participation in the illegal strike and that the dismissal was warranted.

Q: What is a return-to-work order?

A: A return-to-work order is issued by the Secretary of Labor, requiring striking employees to return to work. Failure to comply with this order can be grounds for dismissal.

Q: What is compulsory arbitration?

A: Compulsory arbitration is a process where a government agency investigates a labor dispute and makes a binding award on all parties involved.

Q: What are back wages?

A: Back wages are the wages an employee would have earned had they not been illegally dismissed. They are awarded to compensate for lost income.

Q: What is separation pay?

A: Separation pay is a monetary benefit awarded to employees who are terminated from employment due to authorized causes, such as redundancy or closure of the company. It may also be awarded as an alternative to reinstatement when reinstatement is no longer feasible.

Q: How does a compromise agreement affect a labor dispute?

A: A compromise agreement is a settlement between the parties, where each makes concessions to avoid further litigation. It is binding and has the effect of res judicata, preventing the re-litigation of settled issues.

Q: What is res judicata?

A: Res judicata is a legal principle that prevents a party from re-litigating an issue that has already been decided by a court or tribunal.

Q: What if reinstatement is impossible?

A: If reinstatement is impossible due to factors like company closure, separation pay is typically awarded as compensation.

Q: What is an illegal lockout?

A: An illegal lockout is when an employer prevents employees from working, typically during a labor dispute, without following legal procedures or having a legitimate business reason.

ASG Law specializes in labor law. Contact us or email hello@asglawpartners.com to schedule a consultation.