Security of Tenure

Every employee shall be assured security of tenure. No employee can be dismissed from work except for a just or authorized cause, and only after due process.

Art. 294. 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 and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. (PD No. 422, as amended and renumbered per DOLE Department Advisory No. 1, Series of 2015)

Purpose of the law

The security of tenure clause aims to protect the employee against arbitrary, oppressive and unceremonious dismissal of his job. Every job provides food on the table, a house to live in or education for the children of every employee. Hence, if not protected, an employee may not able to provide a decent way of living for his family.

Employment can be assumed as a property right and not merely a contractual relationship. It is for this reason that the State has taken up measures to protect employees from unjustified dismissals because the right to security of tenure is not only a statutory right but, more so, a constitutional right.

What is security of tenure?

First sentence of Art. 294 provides that 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.

This means that no employee can be dismissed from work except for a just or authorized cause, and only after due process. This security of tenure applies to all employees regardless of employment status. If an employee was terminated from his employment by his employer without a just or authorized caused, he is considered as illegally dismissed.

Moreover, security of tenure also protects workers from unwarranted and unconsented demotion and transfer. Thus, while due process required by law is applied on dismissals, the same is also applicable to demotions, as demotions likewise affect the employment of a worker whose right to continued employment, under the same terms and conditions, is also protected by law. Moreover, considering that demotion is, like dismissal, also a punitive action, the employee demoted should as in cases of dismissals, be given chance to contest the same (Jarcia Machine Shop and Auto Supply vs. NLRC, G.R. No. 118045, 2 January 1994).

Limitation of security of tenure clause

While security of tenure is a constitutionally guaranteed right of the employee, it does not, however, mean perpetual employment for the employee. This right does not give the employee such vested right in his position as would deprive the company of its prerogative to change his assignment or transfer him where he will be most useful. More importantly, it is an employer’s prerogative to terminate an employee especially when there is a just cause therefore.

What happens if an employee is unjustly dismissed?

Second sentence of Art 294 provides that an employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement.

Reinstatement is separate and distinct from backwages. The former restores the illegally dismissed employee to his previous status prior to his removal while the latter is a form of relief that restores the income that was lost by reason of the unlawful dismissal. In other words, the award of one is not a condition precedent to an award of another.

Reinstatement

It is a kind of relief granted to an illegally dismissed employee. Reinstatement restores the employee who was unjustly dismissed to the position from which he was removed, i.e., to his status quo ante dismissal.

The right to reinstatement cannot be nullified by an employee’s employment elsewhere. So that even if a dismissed employee work overseas does not constitute a waiver of his right to reinstatement because it was done to minimize damages resulting from unjustified dismissal. It is, however, different if the employee unreasonably refuses to report for work with the former employer after reinstatement has been ordered or after the employer has offered to reinstate said employee that the right is considered as renounced.

Separation pay in lieu of reinstatement

Separation pay may be awarded to the employees where reinstatement is no longer possible such as when the establishment has closed or ceased operations at the time the workers should be reinstated or the position to which the employee should be reinstated no longer exists for reasons not attributable to the fault of the employee (RCPI, Inc. vs. NLRC, G.R. Nos. 101181-84, 22 June 1992).

Separation pay awarded in lieu of reinstatement shall be equivalent to at least 1 month pay for every year of service (Ibid.).

Separation pay as a measure of social justice

Separation pay may be allowed in instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character (Gustillo vs. Wyeth Phils., Inc., G.R. No. 149629, 4 October 2004). Those who invoke social justice may do only if their hands are clean and their motives blameless (Ibid.).

Without loss of seniority rights

The phrase reinstatement without loss of seniority rights means that benefits due to an illegally dismissed employee including seniority rights and other privileges will not be affected by his absence due to the pendency of the illegal dismissal case.

Note that seniority right is not constitutional but rather contractual. It is acquired through long-time employment.

Backwages

A form of relief that restores the income of the employee that was lost by reason of the unlawful dismissal. In an illegal dismissal case, backwages is not the principal cause of action but it is the unlawful deprivation of one’s employment violative of the constitutional right to security of tenure.

The award of backwages is not private compensation or damages but it is in furtherance and effectuations of the public objectives of the Labor Code. The award is not in redress of private right but in the nature of a command upon the employer to make public reparation for his violation of the Labor Code (Imperial Textile Mills, Inc. vs. NLRC, G.R. No. 108284, 30 June 1993).

Full backwages

Simply means as one that is not diminished or reduced by the earnings derived by the employee elsewhere during the period of his illegal dismissal (Buenvije vs. CA, G.R. No. 147806, 12 November 2002).

Period covered by full backwages

Full backwages shall be awarded to cover the period from date of illegal dismissal to the employer’s date of actual reinstatement (Panday vs. NLRC, G.R. No. 67664, 20 May 1992). If reinstatement is no longer possible, the backwages shall be computed from the time of illegal termination up to the finality of the decision (Phil. Journalists, Inc. vs. Mosqueda, G.R. No. 141430, 7 May 2004).

Concept of Damages

Damages was defined by the Supreme Court in the case of MEA Builders, Inc. v. Court of Appeals, G.R. No. 121484, 31 January 2005), as the sum of money which the law awards or imposes as a pecuniary compensation, a recompense, or satisfaction for an injury done or a wrong sustained as a consequence either of a breach of a contractual obligation or a tortious act.

Liability for moral and exemplary damages and nominal damages

Moral and exemplary damages are recoverable only where the dismissal of an employee was attended by bad faith or fraud, or constituted an act oppressive to labor, or was done in a manner contrary to morals, good customs or public policy. The person claiming moral damages must prove the existence of bad faith by clear and convincing evidence for the law always presumes good faith.

Nominal damages may be awarded to a plaintiff whose right has been violated or invaded by the defendant, for the purpose of vindicating or recognizing that right, and not for indemnifying the plaintiff for any loss suffered by him. Its award is thus not for the purpose of indemnification for a loss but for the recognition and vindication of a right. Petitioner's violation of respondent's right to statutory procedural due process warrants the payment of indemnity in the form of nominal damages (Allied Banking Corp. vs. Calumpang, G.R. No. 219435, 17 January 2018).

References

- Poquiz, S.A., Labor Relations Law With Notes And Comments, 2006 Edition.

- PD No. 422, as amended and renumbered per DOLE Department Advisory No. 1, Series of 2015.

- Supreme Court decided cases.