PAL seeks reversal of DOLE ruling on wages, retirement age

MANILA, Philippines - Philippine Airlines (PAL) is seeking the reversal of a Labor Department ruling granting hefty back salary increases and higher retirement age for flight attendants.

PAL president Jaime Bautista said apart from the lack of legal and factual basis, the ruling of the Department of Labor and Employment (DOLE) is “confiscatory” as it obliges the flag carrier to share income it did not earn.

In a motion for reconsideration filed by PAL’s lawyers, Bautista said DOLE’s order raising the flight attendants’ retirement age to 60 years old has no justification in law and jurisprudence and goes against industry practice worldwide.

DOLE’s Dec. 23, 2010 ruling favored the Flight Attendants and Stewards Association of the Philippines (FASAP) by granting back salary increases amounting to P222 million, a higher compulsory retirement age at 60 years old, and increased monthly rice allowance of P1,800, among others.

In particular, PAL wants DOLE to reconsider and reinstate PAL’s lump-sum offer of P80 million to FASAP members considering its financial status for the periods subject of the collective bargaining agreement (CBA) negotiations; maintain the retirement age at 45 years old instead of 60 while eliminating any distinction between domestic and international flight attendants for flight assignments; and peg the monthly rice allowance for 2007-2008 of FASAP members at P1,200 until Sept. 30, 2007; P1,500 between Oct. 1, 2007 to Sept. 30, 2008; and P1,800 from Oct. 1, 2008.

Bautista explained that the subject of the labor dispute is the deadlock in the CBA negotiations between PAL and FASAP from the period July 16, 2007 to July 15, 2010, but the DOLE based its economic awards to FASAP on PAL’s purported financial statements for fiscal year 2010-2011, specifically covering only the months of April, May and June 2010.

“These financial statements cannot subvert or supplant the fact that PAL incurred losses. In essence, DOLE is directing PAL to grant hefty pay increases for July 2007 to July 2010 despite its knowledge and awareness of PAL’s massive losses for the same period,” Bautista stressed.

He lamented that it is unjust and even confiscatory to oblige PAL to share income it did not even earn or does not have. “DOLE expects PAL to produce the money but as to how, the decision did not say,” Bautista said.

He said PAL could only infer that the DOLE is probably of the view that future income of the company from April 2010 forward can be applied to the salary increases it granted to FASAP for July 2007-2008 July 2008-2009, and July 2009-2010.

“But this will result in an absurd situation. It is an unthinkable fiscal maneuvering. Considering that the DOLE had already ‘pledged’ any income of PAL for the next years, one can only wonder where PAL is supposed to source funds for the succeeding demands for salary increase when negotiations for the 2010-2015 PAL-FASAP CBA begin,” Bautista said.

To prove its point, PAL presented pertinent records to DOLE showing that it suffered losses of $297.8 million in fiscal year 2008-2009, and $14.3 million for fiscal year ending March 2010.

On the retirement age issue, Bautista said DOLE should not have ignored the fact that the memorandum of agreements (MOAs) between the company and FASAP that provided lower retirement age were the product of voluntary negotiations within the framework of their previous CBA.

He said Article 287 of the Labor Code, as amended by Republic Act 7641, states that any person may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. “Thus, a careful reading of the above provision indicates that employers and employees are at liberty to agree and fix the applicable retirement age even at below 60 years old.”

He added that DOLE failed to consider the fact that the average retirement age of most, if not all, of PAL’s fiercest competitors in the ASEAN region is much less than 60 years old. Thus, early retirement for flight attendants is fast becoming the rule rather than the exception.

He also chided DOLE for accepting FASAP’s argument that since the 2005-2010 CBA containing the agreed retirement age had already expired then there is no more agreed retirement age to invoke. “We can’t understand how DOLE and FASAP can legally justify that only the retirement provisions of the PAL-FASAP CBA have expired while other provisions on salaries, perks and work rules remain valid and in effect,” he said.  

Even the absence of an agreement, Bautista said, does not warrant the outright rejection of PAL’s position without taking into account the bargaining history between the parties.

He said PAL did not force FASAP officers and members to accept the early retirement provisions as these were subject of negotiations and were approved and ratified by FASAP members in exchange for numerous concessions, in the form of monetary benefits, easier work rules and other perks.