Dear Atty. Kathy,

I am helping my co-employees who filed a case against our company, for underpayment/non-payment of holiday pay, overtime pay, rest day pay, and service incentive leave. During the mediation proceedings in the DoLE, my co-employees decided by themselves and voluntarily agreed to a settlement of about 75 percent of the amount that we are claiming. Is this fair and binding?

Marlowe

□□□□□

Dear Marlowe,

Article 233 of the Labor Code provides that if parties voluntarily agree to a settlement with the help of the DoLE’s regional offices, such agreement is considered final and binding:

ART. 233. [227] Compromise Agreements. — Any compromise settlement, including those involving labor standard laws, voluntarily agreed upon by the parties with the assistance of the Bureau [NCMB] or the regional office of the Department of Labor, shall be final and binding upon the parties. The National Labor Relations Commission or any court, shall not assume jurisdiction over issues involved therein except in case of non-compliance thereof or if there is prima facie evidence that the settlement was obtained through fraud, misrepresentation, or coercion.

Further, as ruled by the Supreme Court, the mere fact that the settlement amount is not equal to what the employee was asking for does not automatically mean that there was fraud and the compromise agreement will not be binding, since when entering into a compromise agreement, the parties are expected to make reciprocal concessions, in other words, to give and take. Regarding this, it is the very nature of compromise agreements that the they may not be what the parties actually want, but that they accept to keep the peace or avoid a long court case. Therefore, employees should not expect to get the full amount of their claims when entering into a compromise agreement with the employer.

Based solely on your narration, your co-employees voluntarily agreed to the settlement amount, which is less than the amount they are claiming. With regard to this matter, “[t]he fairness/reasonableness of settlement agreements shall depend on the totality of the circumstances, the degree of voluntariness and credibility of the consideration.” Thus, with the assistance of the DoLE officer handling the mediation proceedings to ensure that the terms of the parties’ settlement are fair and reasonable under the circumstances, and if there is no proof that the settlement was obtained through fraud, misrepresentation and coercion, the settlement would be fair and binding on the parties, even if the amount is less than what your co-employees are claiming.

(Forever Manpower Services Agency, Inc. et al. vs. CA, et al., G.R. No. 271784, 13 January 2026)

Atty. Kathy Larios