What are the Rights of a Contractual Employee in the Philippines?

Youve finally gotten your first job offer. Congratulations! If you nabbed a good one, better. The
potential downside? The position is contractual. Not to worry though, a contractual job offer isnt
something that should totally discourage you from accepting a position.
Contractual jobs carry some stigma since people often think that there isnt any promise of longterm job security and that these positions dont offer benefits. There are also instances where
loopholes in the Philippine legal system are abused at the expense of their contractual
employees welfare.
But not all companies are like this. Many contractual jobs can lead to permanent positions if the
employee has displayed good work performance. More importantly, contractual jobs should carry
the same benefits and terms of employment as permanent positions. Let us say that again
contractual jobs should carry the same benefits and terms of employment as permanent
positions.
The Philippine government has taken steps to ensure that contractual employees are as
protected by law as permanent employees. In 2011, the Department of Labor and Employment
issued Department Order 18-A, Series of 2011, which lists the rights (Section 8) that contractual
employees are entitled to, as well as the guidelines for the terms of their contracts.
So what are the rights of a contractual employee? Here goes:
1. Safe and healthful working conditions
Whether your position is a desk job or it entails a lot of physical labor, your employer should
ensure that your health isnt compromised at work. Your employer should take steps to safeguard
your health and well-being while on the job.
2. Service incentive leave, rest days, overtime pay, holiday pay, 13th month pay, and separation
pay
Aside from your wage or salary, you should also be given paid time off, as well as additional pay
for any work done beyond your contracts work hours, 13 th month pay and a separation pay if
your employment is terminated early.
3. Retirement benefits under the SSS or retirement plans of the contractor, if there is any
If your employer has a retirement plan for their permanent employees, you should also be
granted the same benefit.
4. Social security and welfare benefits
Your employer must also grant you SSS, PhilHealth, and Pag-Ibig benefits, just like any other
permanent employee.
5. Self-organization, collective bargaining and peaceful concerted action
Contractual employees may also join or form employee unions, collective bargaining
agreements, and join peaceful demonstrations or protests. Your employment shouldnt be in
jeopardy should you decide to join a union.
6. Security of tenure
You should be ensured secure employment for the duration stated on your employment contract,
unless your employer has a defensible reason for early termination (such as your inability to
perform tasks specified in contract) and has terminated you under due process.

https://www.kalibrr.com/advice/2015/06/rights-of-a-contractual-employee-philippines/
Contractual and Regular Employee Benefits in the Philippines An Overview
7:36 AM by PINOY STREETJOB 11 comments

"Knowing your benefits even as a contractual employee will lessen tension and build trust in the
organization you belong in."
The Philippine Labor Code stipulates that an employee may be hired with a probationary period
from one to six months upon date of engagement, and it shall not be continued further than that
unless due to required period of apprenticeship. After the probationary period, an employer may
continue or end an individual's employment based on pre-agreed Key Results Areas (KRA) or
other forms of performance appraisals.
During the probationary period, however, an employer has no right to neither discriminate an
employee nor waive his /her contractual employee benefits. And at the end of this period, hired

individuals should receive regular employee benefits as provided by Philippine Laws on

employment.
How do contractual and regular employee benefits compare?
Within the probationary period, a new-hire continues to undergo evaluation on a daily basis,
although formal performance reviews may not come until the first, third, or sixth month. This
evaluation period somewhat gives companies the right to waive benefits enjoyed by regular
employees, including holiday pay and sick leaves. In most cases, sick leaves are converted as
"absences" which in turn are limited to a few number of days only (typically only seven days
within the six-month period).
Expectedly, contractual employee benefits do not level with regular employee benefits, and
companies have some good excuse for this. First, contractual employees, being new to the job,
do not perform as well as regular employees (although this is not always the case). They lack the
experience which makes for their lower pay and fewer benefits than have regular employees.
Contractual or probationary employees are not deprived of a few benefits, though. When you are
a contractual employee in the Philippines, you can enjoy a day off on holidays (depending on
your company's operations) and will also be paid a holiday premium commensurate to your daily
pay.
The differences between contractual employee benefits and regular employee benefits are in the
paid vacation and sick leaves which total to 15 days per year. Many companies now also provide
social security benefits to probationary employees from day one.
This chart below elucidates the differences in benefits between these two employment statuses:
Benefits

Contractual
Employees

Regular
Employees

Sick Leaves

none

yes

Vacation Leaves

none

yes

Social Security System (SSS) - private sector GSIS - public

sector

company
discretion

yes

Home Development Mutual Fund (HDMF)

none

yes

HMO

none

yes

Philippine Health Insurance Corp. (PhilHealth)

none

yes

Other company benefits (e.g. rice allowance, transportation

allowance, etc.)

Typically none

yes

Many companies in the Philippines now provide company benefits to employees, including rice
allowance, transportation allowance, boarding allowance, and so on. Knowing your benefits even
as a contractual employee will lessen tension and build trust in the organization you belong in.

http://pinoystreetjob.blogspot.com/2010/11/contractual-and-regular-employee.html
Contractual workers not considered regular employees

July 11, 2015 8:57 pm

by PERSIDA ACOSTA

Dear PAO,
My husband and his cousin were employed as truck drivers of a logistics company. They
deliver milk and other similar products all throughout the Philippines. They had a threeyear contract which started in February 2012 up to February 2015. Sometime in
December 2014, rumors in their company were circulating that the two of them were
involved in stealing some company merchandise. Although their supervisor talked to
them, no formal investigation was made.

Last March of this year, they were no longer allowed to enter the company premises. The
guards said that they have been terminated already. So now my husband and his cousin
are contemplating on filing a labor complaint for illegal dismissal against their company
because they believe that they should be considered regular employees since they have
been with the company for several years now. As such, their company cannot simply
terminate them without proper cause and investigation. We just want to get your advice
if they should pursue the filing of their labor complaint.
Pami
Dear Pami,
Article 280 of Presidential Decree (P.D.) No. 442, as amended, otherwise known as the Labor
Code of the Philippines, defines regular employees as those who are 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.
In the situation that you have presented before us, it may very well be said that the tasks of your
husband and his cousin, being truck drivers, are necessary or desirable in the usual business or
trade of their employer as it is engaged in logistics or actual distribution of products to their
clients. However, they cannot be considered as regular employees, notwithstanding the fact that
they have been rendering services to their company for three years because there exists a
contract between them and their former company which particularly stipulates the period of their
employment, that is, from February 2012 up to February 2015. They are, thus, considered to
belong to the exception to the rule as provided in the definition of regular employees mentioned
above.
Accordingly, it is justified for the security guards of their former company not to allow them to
enter the company premises starting March 2015 as their contract of employment is deemed to
have terminated at the end of February 2015. In view thereof, it is not advisable to pursue a
labor complaint against their former employers as this may result ino an unfavorable outcome
for your husband and his cousin.
We further take note of the ruling of the Supreme Court in the case of Labayog vs. M. Y. San
Biscuits, Inc. (494 SCRA 486, G.R. No. 148102, July 11, 2006):
x x x Where the duties of the employee consist of activities which are necessary or desirable in
the usual business of the employer, the parties are not prohibited from agreeing on the duration
of employment. Article 280 does not proscribe or prohibit an employment contract with a fixed
period provided it is not intended to circumvent the security of tenure.
Two criteria validate a contract of employment with a fixed period: (1) the fixed period of
employment was knowingly and voluntarily agreed upon by the parties without any force, duress
or improper pressure being brought to bear on the employee and without any circumstances
vitiating consent or, (2) it satisfactorily appears that the employer and employee dealt with each
other on more or less equal terms with no moral dominance whatever being exercised by the
former on the latter. x x x
Each contract provided for an expiration date. Petitioners knew from the beginning that the
employment offered to them was not permanent but only for a certain fixed period. They were
free to accept or to refuse the offer. When they expressed their acceptance, they bound
themselves to the contract. x x x
We hope that we were able to answer your queries. Please be reminded that this advice is based
solely on the facts you have narrated and our appreciation of the same. Our opinion may vary
when other facts are changed or elaborated.

Editors note: Dear PAO is a daily column of the Public Attorneys Office. Questions for
Chief Acosta may be sent to dearpao@manilatimes.net
http://www.manilatimes.net/contractual-workers-not-considered-regularemployees/199525/
Are Contractual Employees Entitled to Separation Pay?

A fixed-term employee or contractual employee is a type of employee whose employment is

fixed for a certain period of period of time. When the contract expires and is not renewed by his
or her employer, the employment of the contractual employee is deemed to have automatically
terminated.
It is of common knowledge that the termination of an employee involves the payment by the
employer of separation pay. The grant of separation pay is in fact a statutory obligation on the
part of the employer and a demandable right on the part of the employee. Thus, the Labor Code
mandates the grant of separation pay to an employee as an incidence of termination of his or her
employment.
Considering that contractual employees are considered employees only for a fixed period of
time, are they also entitled to payment of separation pay?
As a general rule, contractual employees not entitled to separation pay. The reason for this is
simple. If they are terminated as a result of expiration of their contract, they are not entitled to
termination pay or separation pay because there is no dismissal or termination to speak of.
Separation pay is granted only to employees who are dismissed. With regard to contractual
employees, when the contract with their employer ends, what actually takes place is an
expiration of term and not a dismissal in legal contemplation. In the absence of an actual
dismissal, there can be no claim for separation pay.
The only exception to the above rule is where the contractual employee is dismissed prior to the
end of his contract. If this happens, what takes place is an actual dismissal for which separation
pay may be claimed by the contractual employee. In fact, a contractual employee is considered,
for the duration of his or her contract, as a regular employee. He or she enjoys a security of
tenure for the limited period provided under the contract, and cannot be removed by the
employer without just cause and without following the procedure outlined under the Labor Code
for the termination of a regular employee. Thus, if the contractual employee is removed without
just cause and without following the procedure outlined under the law, the employer not only
commits breach of contract but also illegal dismissal.
Thus, in cases of pre-termination of a contractual employee, it becomes the obligation of the
employer to grant separation pay. As in all cases of termination of employment involving other
types of employees, where the termination is due to serious business losses or financial reverses,
there are Supreme Court cases to the effect that the employer is exempt from payment of
separation pay. Therefore, this should also hold true with regard to contractual employees.
However, there must be sufficient proof that the pre-mature termination of the contractual
employee was actually due to serious business losses or financial reverses. If the employer is
unable to adduce such proof, he is mandated by the Labor Code to pay the contractual employee
separation pay.
Let us help you. For further inquiries, you may seek legal assistance by e-mailing us
at info@ndvlaw.com.
Nicolas & De Vega Law Offices is a full service law firm in the Philippines. You may visit us at the
16th Flr., Suite 1607 AIC Burgundy Empire Tower, ADB Ave., Ortigas Center, 1605 Pasig City,
Metro Manila, Philippines. You may also call us at +632 4706126, +632 4706130, +632 4016392.

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