PAL Labor Dispute Brief

The intended mass dismissal of more than two 2,600 rank-and-file employees of Philippine Airlines, Inc., who are members and officers of Philippine Airlines Employees Association (PALEA), is in violation of the law and the collective bargaining agreement (CBA) of PAL and PALEA.

In August 2009, during the period for the negotiation of a new CBA between PAL and PALEA, PAL announced its intention to close several departments of the company (In-Flight Catering operations, Airport Services operations and Call Center Reservation operations) and “outsource” its functions to various service providers. The intended closure and “outsourcing” would affect around 70% of PALEA’s membership and the total number of rank-and-file employees, 62% of the union leadership, and around 35% of the total employee complement of PAL.

PALEA maintains that the mass retrenchment is invalid and constitutive of unfair labor practice:

1.) It violates the law and the parties’ CBA.

   1.a) The termination of thousands of its regular employees is not necessitated by the company’s financial situation.

   1.b) PAL violated the CBA provision against labor contracting.

   1.c) PAL violated the CBA provision on Job Security.

2.) It violates Article 248 of the Labor Code, and Department Order No. 18-02.

    2.a) Despite PAL’s insistence, what it planned to do was not a “spin-off” but an “outsourcing,” which is equivalent to contracting-out of services.

There is no spin-off of company departments in this case. No subsidiary corporation was formed by PAL, and not one of its divisions was transformed into an independent company. What is involved here is contracting out of functions wherein regular rank-and-file employees and union members will be terminated and the functions that they are performing will be farmed out to service providers. Worse, the terminated regular employees themselves are envisioned to be the employees of the service providers, i.e. upon their termination, they will just be transferred to a different employer but will be performing the same tasks that they had been performing as regular employees of PAL.

Contracting out, whether labor-only contracting or legitimate job contracting, is absolutely prohibited by the parties’ CBA. Section, 4, Article XXIV states:

“Section 4. The Company undertakes not to contract out existing positions, jobs, divisions, and departments presently occupied by present or future regular employees within the collective bargaining unit.”

There are no sufficient bases for retrenchment. Retrenchment is a measure of last resort which should only be undertaken in case of serious and imminent losses. A close review of the financial statements and disclosures of PAL reveals that its business condition is improving and not deteriorating, thereby negating the necessity for retrenchment.

The mass termination of employees constitutes unfair labor practices. It will dissipate union membership and will exclude from the coverage of the bargaining unit the positions that are now held by union members. This will result to the abolition of PALEA. This grim scenario is made even worse when the timing for implementing the retrenchment program is considered. The contracting out of the various departments and the consequent retrenchment of union members are being undertaken at a time when a new CBA between the parties is about to be negotiated. It should not be amiss to state that the CBA negotiation is being proposed by PALEA after more than a decade of suspension of the CBA between the parties. It is aimed at defeating the negotiation of a new CBA.

Job security is also the demand of the PAL pilots and flight crew. Thus PAL management is faced with a three-front war with its airline pilots, flight crew and ground personnel because of its drive to demolish job security, replace regular employees with contractual workers and bust the remaining unions in the company.

The public should know the truth. PAL keeps on repeating the lie that it is losing money and so the workers will have to be the burden of its rehabilitation. Of course PAL will be in the red because the sources of revenues, even its assets, have been transferred to sister companies like MacroAsia and Air Philippines. PAL’s maintenance and engineering department was shifted to MacroAsia and so expenses are charged to the former but the income is reflected in the latter. PAL ground personnel in the outlying stations services Air Philippines so the costs are borne by the former but latter keeps the savings.

Contractualization at PAL is just the tip of the iceberg. In factories, shops, offices and malls contractual workers are working side-by-side with regular employees in doing the same job for lesser pay and worse working conditions. We demand that Congress institute reforms to enhance job security and stop contractualization schemes. PALEA calls for a stop to the race to the bottom in working conditions and labor standards. Ang kontraktwalisasyon ay baluktot na landas.

In the conciliation meeting between PAL and PALEA last Thursday, management moved for the Labor Secretary to decide on the legality of the planned layoff. On the other hand PALEA is asking that mediation continue until an agreement acceptable to both sides is forged.