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The Dismissal Story

(Part I)

I. Security of Tenure –

A. Constitutional & Statutory bases –

a. Constitutional Basis – Article XIII Sec 2 of the Social Justice
provisions of the Phil. Constitution which guarantees “security of
tenure.”

b. Labor Code, Art 294 – “In cases of regular employment, the
employer shall not terminate the services of an employee except for
just cause or when authorized by this Title...“.

i. Security is guaranteed where E-E relationship exists.
ii. The guarantee is for Congress to define and it did so
through the Labor Code
ii. Security means dismissal shall only be for just or
authorized cause for all workers, although the definition of
the allowable causes may vary depending on type of
employment.
iv. The guarantee renders out of place the “employment at
will” regime that prevails in the U.S.

B. Coverage from perspective type of employees –

a. managerial – also requires “just cause” for termination but
employer has wider discretion - may be dismissed for lack or trust
and confidence under limits adjusted to the role of managerial
employees in the enterprise.

i. Grave abuse of discretion is the jurisprudentially defined
limit in determining cause for managerial employees.

b. All other employees – only for just or authorized cause as
defined in the Labor Code.

C. From perspective of type of employment – covers:

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a. regular employment – where the employee engaged in

activities usually necessary or desirable (UND) in the usual
business or trade of the employer

Note 1. – Primary consideration is nature of assigned job
considered from the usual business of employer.

- Regular work is not time-bound (i.e., not
temporary)

Note 2 – nature of job must be viewed from the needs of
the usual business of the employer

Note 3 – term or description used by employer or in the
employment contract is not controlling; a casual or
contractual worker may be considered regular depending
on the nature of his job.

Eg- a gardiner contracted to work for 5 months per
contract, had repeated contracts on gardening chores
for a social club that must maintain a garden –
regular employee. Job is UND.

Note 2 – If UND in business and the service provided is not
as an independent contractor or as a professional, work is
presumed to be regular.

Eg – painter/repair man who commissioned and hops
from job to job with the employer to maintain
building, is regular.

Note 3 – may regular jobs be contracted out to independent
contractors?

- No legal prohibition. Reason – exercise of
management prerogative, but subject to legal
limitations

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- Note that if the contracting out is defective, then

the employer-principal becomes the employer of
the contractor’s employees

- Contracting out may involve all or substantially all
regular jobs (see Wack Wack case)

- does not need union consent according to one
case, because this is exercise of management
prerogative – but note potential ULP if the effect is
violation of the right to self-organization

i. Exceptions:

aa. Specific Project or undertaking whose
completion or termination has been pre-determined
(temporary)

aaa. Important – time or completion
determined when employee is engaged;
• contrast with regular employment that is
not time-bound

o If no determination of time or completion is
made, then employee will be regular; in
case of doubt, presumption of regularity
applies.

Note 1: work is UND; exception is with respect to
time – there is time limitation unlike regular
employment which carries no time limitation

o If work is not UND in business of employer,
such work should generate casual
employment.

Eg – periodical updating of office records
needed by company. One time activity and
limited to calculated time.

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Eg – Alcatel had 7 year contract with PLDT.

Employee of Alcatel cannot claim regular status
because work (contract with PLDT) is
essentially temporary.

Note 2: if project employee lasts for more than a
year, he is not deemed “regular.” The “deemed
regular” provision applies only to “casual” employees
who lasts for more than a year.

Note 3: independent contractor cannot become
regular despite lapse of time and despite work
necessary and desirable to the employer (because of
lack of E-E relationship)

Eg – if periodical updating of records is
contracted out, the independent contractor
does not become a regular employee despite
lapse of time.

Note 4 – Special rules for Construction Industry
where there may be project employees and non-
project employees.

- Indicators of project employment

o The project and its duration are
determinable;
o The service the worker is to undertake in
the project is specified;
o The worker when not engaged is free to
work elsewhere;
o The termination of employment is reported
to the DOLE.

- With completion of project, project employees
end their service with the project (can be shifted
to other projects but must qualify as project
employees there).

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- Though length of time is not determinative for

project employment, where project employees
are repeatedly rehired, their character as project
employees may cease and they can become
regular employees (a liberal and equitable
application by the Court).

- Work pool – those in work pool (from which
workers are drawn as operations may require) are
non-project employees (because they are not
assigned to work for specific time-bound project).
But in one case, Court said, they may either be
regular or project employees (if they satisfy
project employee requirements).

bb. Seasonal in nature, for the duration of the
season (temporary).

Note 1: work is also usually necessary and desirable
but is specific and time limited to the season.

Note 2 – their work is UND (and employment is
arguably regular) but is simply not available during off
season, i.e., not by employer’s choice but due to
nature of the job).

Eg. overflow work needed by tax firm
during annual income tax preparation and filing
period., or seasonal labor engaged in
harvesting of palay. The work is specific and
time-limited to the tax or harvesting season.

Note 3 – decided cases have referred to these
workers as regular seasonal employees – those called
to work season after seaon.

- REQUISITES: (1) they do seasonal work AND
(2) they are employed only for the duration of
the season;

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§ as regular workers, they are entitled

to benefits of regular employees
during their seasonal work.

§ unlike project workers, they are
regular workers and cannot work for
other employers during the season

§ during off season, their E-E exists but
is suspended, not severed.

§ there may be “pakiao” seasonal
workers, as pakiao refers to the
manner of compensation, not to the
character of employment.


b. Casual Employment – work is NOT UND in usual trade or
business.

1. even if not UND, after one year, whether work is
continuous or broken, employment is deemed regular but
only with respect to casual activity

Note 1 – “regular means” – security of tenure with
respect to the casual work:

- casual employment shall continue while
casual activity exists

- if activity is intermittent, regularity means
that employee with one year of service
must be given work everytime casual work
is needed

- terms of employment of regular employee
of equivalent level must apply

Note 2 – do the casuals become regular employees or
are merely “deemed” or treated as regular?
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- Note that worker is regular only with
respect to the casual activity that has lasted
for one year.

- May not be a question of mere semantics.
Are they entitled to be members of BU of
regular employees?

Note 3 - whether work is UND – is a evidentiary fact
that must be proven.

c. SPECIAL CASE I: Fixed term employment doing UND work (Brent
ruling)

i. Conceptually, regular employment is not time-
bound work or for fixed period work. In Brent the Court
recognized the validity of fixed period work for UND work if:

(1) agreed upon knowingly and voluntarily by parties;
(2) without any force, duress or improper pressure brought
on the employee or other factors vitiating consent;
(3) with the parties standing on more or less equal terms.

- If requisites are not present and the worker is a
not an independent contractor, then employment is
regular.

Note 1 – Brent contract was entered into before the
Labor Code when fixed term contract was valid under
the Civil Code. This, it seems, was the reason the
Court recognized the validity of the fixed for a UND
job. – it was valid when it was entered into.

- The question that comes up is whether the
Brent contract can be entered into after the
Labor Code.

- Under Brent, the Court has effectively
created a new type of employment that the
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Labor Code does not specifically provide for

and has recognized this type in subsequent
cases.

Is this effectively a JUDICIAL LEGISLATION?

ii. the Brent worker is not regular although his
work is UND but he is entitled to regular status during
the fixed period.

iii. Fixed period contract can be renewed
provided under the Brent terms.

iv. Brent worker is not a regular contractor
because he is subject to employer’s control.

d. SPECIAL CASE II – overseas seafarer – are fixed period
employees contracted to work in seagoing vessels pursuant to
Contract approved by the POEA pursuant to its Standard
Employment contract POEA SEC.

i. entitled to security of tenure during the term of the
contract, and to all the benefits required by the contract and by
the POEA SEC.

ii. their terms of employment are covered (at the minimum)
by the Labor Code except to the extent modified or enhanced by
their employment contract and by their CBA.

e. Probationary Employees – (non-regular employment) on
probation (under test or trial) by employers based on their
prerogative to choose who will and who will not be hired.

i. Probationary employment and the terms of the probation
must have been agreed upon, otherwise, employment is
regular (if work is UND)

aa. the dismissal must be based on assessment and
failure to qualify based on probationary standards

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Note – No valid assessment, no valid dismissal,

unless based on other just or authorized cause

bb. Power to terminate is subject to the ff:

• Must be in accordance with the specific
requirements of probationary contract;
o Terms must be explained, accepted and
applied

• If time is specified, then assessment must be
within that time

• Employer assessment must be in good faith

• No unlawful discrimination in the dismissal

cc. Probationary period :

Gen rule – 6 months unless another period is
agreed upon justified by company policy or nature of
work.

- Eg – longer than 6 months if the learning
period for the job takes longer than 6
months.

o 6 months – computed as 180 days

- But no successive probationary periods
allowed, but extension may be allow for a
worker who has flunked the original period
and is given another chance by the
employer

- Probation period and fixed period
compared:

o Both are time bound
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o Probation requires standards made

known to employee at hiring and
there must be assessment; no such
requirement for fixed period
employment
o Probation based on performance, no
such condition in fixed period
employment
o Ground for termination – probation
has extra ground – failure to qualify;
if not shown, termination is unlawful.

- Note – for teachers: under Education
manual – probationary period is 3 years.
Applicable to full-time teachers who must
render satisfactory service.

- If dismissal of probationary employee is
invalid, there may be order for
reinstatement. To what position – to be
dictated by grounds for termination.