PAL seeks reversal of DoLE ruling on back pay hike, retirement age

By EMMIE V. ABADILLA
January 11, 2011, 12:59am

MANILA, Philippines – For lack of legal and factual basis, Philippine Airlines (PAL) wants the labor department to reverse its ruling granting hefty back salary increases and higher retirement age for flight attendants. “This order is ‘confiscatory,’ obliging us to share income we did not earn,” PAL President and COO Jaime J. Bautista told reporters yesterday.

Last month (Dec. 23, 2010), the Department of Labor and Employment (DoLE) granted the demands of the Flight Attendants and Stewards Association of the Philippines (FASAP), consisting of back salary increases amounting to P222 million, a higher compulsory retirement age at 60 years old plus increased monthly rice allowance of P1,800, among others.

However, last Friday, PAL lawyers filed a motion asking DoLE to reinstate the flag carrier’s lump-sum offer of P80 million to FASAP, considering PAL’s financial status while it was negotiating the collective bargaining agreement (CBA). PAL lost US$297.8 million in fiscal year 2008-2009 and US$14.3 million for fiscal year ending March 2010.

PAL likewise sought to maintain the retirement age of flight attendants at 45 while eliminating any distinction between domestic and international attendants for flight assignments. Raising their retirement age to 60 goes against industry practices worldwide, the flag carrier argued.

In addition, PAL wants to 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 October 1, 2008.

“DoLE’s wanton disregard of the evidence and rules of fair play is a violation of its duty to render a decision based on fact and law,” according to PAL.

While the subject of the labor dispute is the deadlock in the CBA negotiations between PAL and FASAP from July 16, 2007 to July 15, 2010, 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, the PAL President explained.

“These financial statements cannot subvert the fact that PAL incurred losses,” he stressed. “In essence, DoLE is directing PAL to grant hefty pay increases for July 2007 to July 2010 although it knows of PAL’s massive losses for the same period. DoLE expects PAL to produce the money but as to how, the decision did not say.”

They can only infer that DoLE thinks 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,” Bautista reasoned.

“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.”

On the retirement age issue, DoLE should not have ignored the fact that the memorandum of agreements (MoAs) between PAL and FASAP providing lower retirement age resulted from voluntary negotiations within the framework of their previous CBA.

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 CBA or other applicable employment contract.