2. Security of tenure, contractualization, and BALANCING INTERESTS
The Right to Stability

3. 5 Basic Guarantees The State shall: afford full protection to labor
promote full employment and equality of employment opportunities guarantee the rights of all workers to
self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law
entitled to security of tenure, humane conditions of work, and a living wage.
participate in policy and decision-making processes affecting their rights and benefits as may be provided by law…
- Art. XIII, Sec. 3, 1987 Constitution

4. The Statutory Guarantee
Security of Tenure
In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title.
An employee who is unjustly dismissed from work shall be entitled to:
reinstatement without loss of seniority rights other privileges
full backwages, inclusive of allowances
other benefits or their monetary equivalent
- Art. 279, Revised Labor Code of the Philippines

5. What is Security of Tenure?
Security of tenure is the right of a person, once officially accepted as a regular employee, to retain that employment. Under the Code, a regular employee cannot be terminated except for what the law calls Just Causes or Authorized Causes or due to Disease.

6. Why is Security of Tenure Important?
It allows individuals, especially those with families, to plan for the future;
It prevents arbitrary terminations, ensuring a more level playing field with employers;
It enhances the dignity of the employee.

7. What are the Limits to Security of Tenure?
The employee can still be terminated due to valid statutory grounds;
The right to security of tenure under the Labor Code only applies to Regular Employees.

8. What is a Regular Employee?
Engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season.

9. 5 Classifications of Employees under the Code
Regular: perform activities which are usually necessary or desirable in the usual business or trade of the employer
Project: employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee;
Seasonal: where the work or service to be performed is seasonal in nature and the employment is for the duration of the season;
Casual: One who doesn’t fall under any of the above, and renders less than one year of service. If one year of service is rendered, the employee becomes Regular.
Probationary: Prospective employees who must complete a probationary period before they qualify as Regular.

10. What are the Advantages of being Regular?
A clear right to Security of Tenure under the Code, with all the benefits that implies;
In general, the right to form unions, collectively bargain and strike;
The right to separation pay;
A clear right to other benefits under the law which only apply to regular employees. (The text of the laws that grant SSS and PhilHealth benefits, for instance, seem only to apply to regular employees);
Accumulation of seniority and possibility for promotion;
Entity which controls the work environment is the actual employer as opposed to a principal;
Greater dignity and respect;

11. The Problem of Regularization
additional costs on the part of Employers
many Employers resort to various methods, legal and illegal, to minimize the number of employees who achieve regular status.
legal method:
contractualization
casualization of labor

12. 3 Faces of Contractualization
Contractualization takes advantage of grey areas in the law that allow Employers to use workers other than regular employees to perform jobs which are usually necessary or desirable in the usual business or trade of the Employer.
In general, this has three forms:
Job Contracting
Fixed Term Employment
Abuse of Probationary Status

13. 1. Job Contracting
farming out of work by an Employer, acting as a Principal, to an independent Contractor
contracted workers perform the work required by the Principal, frequently in the place of business of the Principal, but they remain employees of the Contractor and not the Principal.
Currently, there is no limit as to the nature of the work that may be farmed out.

14. 1. Job Contracting
The effect is that you can have workers who perform exactly the same tasks as regular employees, but who will not be entitled to the same benefits or opportunities. While they are regular employees of the Contractor, these Contractors seldom provide benefits at par with the Principal. As far as tenure goes, the workers contracts are co-terminus with the contract between the Principal and the Contractor, which is usually short-term. Contractors also seldom have any say in the work environment of their workers.

15. Job Contracting
While the Code makes Principals solidarily liable for violations committed by the Contractor, Job Contracting still allows Principals to interpose a corporate layer between themselves and the workers.
Couple this atmosphere with the fact that the workers frequently engage in work necessary to the Principals, and it is no surprise when Principals assume full control of the workers, but utilize the Contractors as buffers to liability, resulting in an illegal relationship referred to as Labor-only Contracting under the Code.

16. 2. Fixed Term Employment
not a concept found in the Labor Code, but in the decisions of the Supreme Court which has held that these are allowable in certain instances
lack of a clear enumeration, compounded by a lack of a statutory definition of Fixed-Term employment, makes this a gray area of the law
prevents employees from achieving Regular status through length of service
Employers hire workers to perform the work of regular employees for, say, five months, after which they are terminated from service regardless of their performance

17. Abuse of Probationary Status
One means of preventing the acquisition of Regular status is simply to rarely or never “pass” a probationary employee to Regular status.

18. Why is contractualization rampant?
Regularization benefits employees but at a cost to the Employer, which sometimes the Employer can ill afford;
The law as currently stated includes grey areas which Employers can exploit to reduce the number of Regular workers in their employ.

19. The “Security of Tenure Act of 2013”
Our Solution
The “Security of Tenure Act of 2013”

20. What the Bill Does Eliminates gray areas in the law:
Redfines the nature of “regular” work;
Defines Fixed-Term employment and establishes the general rule that such is prohibited;
Limits Job Contracting to situations where Fixed-Term employment is allowed;
Provides safeguards against the abuse of the Probationary Status of employees;
Balances the interests of the employees in Regularization with the need for flexibility of Employers in industries which are currently highly competitive or temporarily distressed.

21. A Clear Definition of “Regular”
LABOR CODE
SECURITY OF TENURE ACT
engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer except where the employment has been fixed for a specific project or undertaking, the completion or termination of which has been determined at the time of the engagement of the employee or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season
An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, that any employee who has rendered at least one year of service, where the position no longer exists at the time of reinstatement for reasons not attributable to the fault of the employer, the employee shall be entitled to separation pay equivalent to at least one-month salary or to one-month salary for every year of service, whichever is higher, a fraction of at least six months being considered as one whole year.
Employment shall be deemed to be regular where:
The employee has been engaged to perform activities which are necessary in the usual business or trade of the employer, except where:
work or services to be performed falls under allowable fixed-term employment
probation period has not yet been terminated or expired.
 The employee is a learner allowed or suffered to work after the termination of training under Art. 75 (d)

22. Key Points of the Proposed Bill: REGULAR EMPLOYEE
LABOR CODE
SECURITY OF TENURE ACT
Regular Employee: performs activities which are usually necessary or desirable in the usual business or trade of the employer
Except:
project employees
seasonal
 Regular Employee: Performs activities which are necessary in the usual business of the employer
Except: Fixed term and Probationary
Fixed-term
Seasonal
Industries experiencing losses in highly competitive markets 22

23. Key Points of the Proposed Bill: REGULAR EMPLOYEE
SECURITY OF TENURE ACT
In the following instances:
Replacement of an employee who is temporarily absent
Temporary increase in the volume of business,
To meet expansion of a company’s activity,
Part-time contracts, where the employee undertakes to render services for a number of hours or days less than two thirds (2/3) of the usual number of working hours for the same position in the establishment;
Construction work;
Professional sports;
Corporate officers, and those occupying managerial, confidential, or technical positions;
OFWs
Officials of private academic institutions. 23

24. Key Points of the Proposed Bill: LABOR CONTRACTING
LABOR CODE
SECURITY OF TENURE ACT
Art The Secretary of Labor shall draft rules regulating Legitimate Contracting
General rule that work necessary to an employer cannot be contracted out.
DOLE Sec may prohibit Contracting in specific industry, after consultation
DO 18-02
Contracting: performance of a definite job for a specific period
- It makes it possible for employers to contract out work indiscriminately
Article 108-a. Definition of contracting. - "Contracting" or "subcontracting" refers to an arrangement whereby a principal agrees to assign or delegate to a contractor or subcontractor the performance or completion of a specific job, work or service within a definite or predetermined period, regardless of whether such job, work or service is to be performed or completed within or outside the premises of the principal; provided that such job, work or service must fall under fixed term employment under Article 280-A.
This establishes a new general rule that work necessary to an employer cannot be contracted out.
Cannot contract out if the work is necessary to the usual business of the employer 24

25. Key Points of the Proposed Bill: LABOR CONTRACTING
LABOR CODE
SECURITY OF TENURE ACT
ARTICLE 109. Solidary liability. —Principal shall be held responsible with his contractor for any violation of the Labor Code.
Principal becomes liable when: 
Labor code violations;
labor-only contracting;
bad-faith contracting;
pre-terminated contracts due to the fault of the principal.
- taking undue advantage of the economic situation
lack of bargaining strength of the contractual employee,
undermining his security of tenure or basic rights, or circumventing the provisions of regular employment. 

26. Key Points of the Proposed Bill: PROJECT EMPLOYEES
LABOR CODE
SECURITY OF TENURE ACT
Specific project or undertaking, the completion or termination of which has been determined at the time of the engagement
separate and distinct from the usual business
completion or termination of project has been determined at the time of engagement
Voluntarily agreed
Reportorial requirements submitted to the DOLE prior to effecitivity of the contract

27. Key Points of the Proposed Bill: PROBATIONARY EMPLOYEES
LABOR CODE
SECURITY OF TENURE ACT
ARTICLE 281. Probationary employment.
6 months
reasonable standards for qualification as regular employee
terminated for a just cause or when he fails to qualify as a regular employee
employee who is allowed to work after a probationary period shall be considered a regular employee
The termination of probationary employees shall not be valid if done to preclude acquisition of security of tenure by the employee.
Rebuttable presumption of the intent to circumvent the right to security of tenure:
hiring of a new set of probationary employees after termination of previous probationary employees; and
a disproportionately high number of probationary employees vis-a- vis regular employees.
The badges provides a set of presumptions which can help level the field by placing the burden on the Employer to prove that certain patterns of behavior were not intended to circumvent the right to security of tenure.

28. Probationary Employee Safeguards
The badges of circumvention of the right to security of tenure of probationary employees must be taken together and considered with the circumstances.
This final paragraph balances the earlier provision, and makes it clear that the patterns of behavior that serve as badges of abuse do not automatically prove that the terminations were meant to circumvent the right to security of tenure. The employer being in control of the records of employment, should easily be able to prove good faith if such exists.

29. RECAP “Security of Tenure Act of 2013”
Eliminates gray areas in the law:
Clarifies the nature of “regular” work;
Defines Fixed-Term employment and establishes the general rule that such is prohibited;
Limits Job Contracting to situations where Fixed-Term employment is allowed;
Provides safeguards against the abuse of the Probationary Status of employees;
Balances the interests of the employees in Regularization with the need for flexibility of Employers in industries which are currently highly competitive or temporarily distressed. 29