Understanding Liability for Overseas Workers’ Compensation

DUMEZ COMPANY AND TRANS-ORIENT ENGINEERS, INC., PETITIONERS, VS. NATIONAL LABOR RELATIONS COMMISSION AND VERONICO EBILANE, RESPONDENTS. G.R. No. 74495, July 11, 1996

Imagine working abroad, far from home, when a sudden illness or injury strikes. Who is responsible for covering your medical expenses and lost wages? This scenario highlights a critical question in overseas employment: determining liability for workers’ compensation when an employee falls ill or gets injured while working in a foreign country.

The case of Dumez Company vs. NLRC delves into this very issue. It involves a Filipino carpenter working in Saudi Arabia who became ill and sought compensation from his employers. The Supreme Court’s decision clarifies the responsibilities of employers and the applicable laws in these situations, particularly when the host country has its own social insurance system.

Navigating Overseas Employment Agreements and Host Country Laws

Overseas employment agreements often stipulate that workers’ compensation benefits will be provided within the limits of the host country’s compensation law. This means that employers and employees must understand the relevant laws and regulations of the country where the work is being performed. This is especially important when the host country has a comprehensive social insurance system.

In this case, the key legal principle is the applicability of the General Organization for Social Insurance Law of Saudi Arabia (GOSI Law). This law mandates coverage for all workers in Saudi Arabia, regardless of nationality, sex, or age, who are employed under a labor contract. Article 49 of the GOSI Law states that the General Organization, not the employer, is responsible for paying insurance compensation to beneficiaries, unless the injury was intentionally caused by the employer or resulted from their gross negligence.

For example, consider a Filipino engineer working on a construction project in Dubai. If the engineer is injured on the job, the UAE’s labor laws and social security system would govern the compensation benefits, potentially shifting the liability away from the direct employer to the UAE’s insurance system, similar to the GOSI law.

The Labor Code of the Philippines, specifically Article 166, also plays a role. It emphasizes the State’s role in promoting a tax-exempt employees’ compensation program, ensuring that employees receive adequate income and medical benefits in case of work-connected disability or death. This reinforces the principle that compensation programs are designed to protect workers and provide them with necessary support.

The Carpenter’s Ordeal: A Case Study

Veronico Ebilane, a carpenter hired by Dumez Company through Trans-Orient Engineers, Inc., began working in Riyadh, Saudi Arabia, in July 1982. Just a month later, he experienced severe abdominal pain and was rushed to the hospital, where he underwent an appendectomy. During his confinement, he developed right-sided weakness, numbness, and difficulty speaking, diagnosed as Atrial Fibrillation and CVA embolism. His employment was terminated effective September 29, 1982, and he was repatriated to Manila in October.

Ebilane filed a complaint for illegal dismissal with the Philippine Overseas Employment Administration (POEA), arguing that his termination was without cause. He claimed that the termination was based on being unqualified, which he disputed.

Here’s a breakdown of the case’s procedural journey:

• POEA Decision: The POEA Administrator ruled in favor of Ebilane, ordering the companies to pay him U.S.$1,110.00 for medical compensation benefits. The POEA acknowledged that Ebilane could be terminated for medical reasons but found that the employers failed to provide his daily allowance for work disability.
• NLRC Appeal: The companies appealed to the National Labor Relations Commission (NLRC), which affirmed the POEA’s decision.
• Supreme Court Petition: The companies then filed a petition for certiorari with the Supreme Court, arguing that there was no legal basis to require them to pay medical compensation benefits.

The Supreme Court ultimately sided with the companies, stating:

“That compensation for disability was to be provided in accordance with the law of the host country, Saudi Arabia, is a necessary consequence of the compulsory coverage under the General Organization for Social Insurance Law of Saudi Arabia…”

The Court further emphasized that:

“Article 49 of the GOSI Law of Saudi Arabia provides that the General Organization shall pay to the beneficiaries the insurance compensation, the employer being under no obligation to pay any allowance to the insured or to his heirs unless the injury has been intentionally caused by the employer…”

Practical Implications for Overseas Workers and Employers

This ruling underscores the importance of understanding and adhering to the laws of the host country in overseas employment. It clarifies that employers are not automatically liable for medical compensation benefits if the host country has a social insurance system that covers such expenses. Instead, the responsibility falls on the host country’s General Organization.

For overseas workers, this means they should familiarize themselves with the social insurance laws of the country where they are employed. They should also ensure that their employers are complying with these laws by remitting the necessary premiums to the appropriate funds. Employers need to ensure their compliance with host country regulations, including registering employees with the local social insurance schemes.

Key Lessons

• Host Country Laws Prevail: Workers’ compensation is primarily governed by the laws of the host country.
• Social Insurance Systems: If the host country has a social insurance system, it typically covers work-related injuries and illnesses.
• Employer’s Responsibility: Employers must comply with the host country’s social insurance laws and remit the necessary premiums.
• Employee’s Due Diligence: Employees should understand their rights and the coverage provided by the host country’s laws.

Consider this scenario: A company sends a team of IT professionals to Germany for a project. If one of the employees suffers a work-related injury, Germany’s social security system would likely cover the medical expenses and lost wages, provided the company has complied with German laws and regulations.

Frequently Asked Questions

Q: What happens if the host country doesn’t have a social insurance system?

A: In the absence of a social insurance system, the employment agreement and general principles of liability would govern. Employers may be directly liable for workers’ compensation benefits.

Q: How can I find out about the social insurance laws of the country where I’ll be working?

A: Consult with your employer, the Philippine Overseas Employment Administration (POEA), or seek legal advice from a lawyer specializing in international labor law.

Q: What should I do if I get injured while working overseas?

A: Seek immediate medical attention, report the injury to your employer, and document all medical expenses and lost wages. Also, familiarize yourself with the host country’s procedures for filing a workers’ compensation claim.

Q: Are there any exceptions to the rule that the host country’s social insurance system is responsible?

A: Yes, if the injury was intentionally caused by the employer or resulted from their gross negligence, the employer may be directly liable.

Q: What if my employer fails to comply with the host country’s social insurance laws?

A: The employer may be subject to penalties and may be held directly liable for workers’ compensation benefits.

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