Absolutely nothing whatsoever, I dare say. There is nothing illegal or immoral per se about contractual or fixed-term employment, even according to the Supreme Court itself, in the landmark case of Brent School Inc., et. al. vs. Zamora, et. al. (181 SCRA 702 [1990]). If the Philippines has an outstanding policy of deploying overseas contract workers, and hailing them as the new heroes of Philippine society, then why can’t we allow the same fixed-term arrangements which greatly benefited our economy to become the norm here in our own country? Over the years, we have sent hundreds of thousands of nurses, seafarers, engineers, domestic helpers, construction, factory, and hospitality workers abroad to work for 2 to 3 years in a foreign country under a contract of employment with a fixed-term, and yet, in the Philippines, such fixed-term arrangements are considered as taboo.
The Labor Code provides that an employee who performs work which is necessary or desirable in the usual business or trade of the employer is considered to be a “regular employee” starting on the first day of his employment. If he is hired on a temporary, fixed-term, or probationary basis, he is presumed to be “regularized” after being employed for more than 6 months. If he is a project or seasonal employee and is allowed to work after the completion of the project or beyond the season, he is also deemed to be regularized. If he is a “casual employee”, or one whose nature of work is not necessary or desirable to the usual business or trade of the employer, then he is regularized after 1 year of continuous or broken employment. A regular employee enjoys “security of tenure” in his employment until he reaches the age of compulsory retirement, which is 65. With security of tenure, he cannot be terminated by his employer except for just or authorized causes sanctioned by law. Thus, he can look forward to his retirement pay, which is equivalent to at least one-half month salary for every year of service.
A “fixed-term employee”, on the other hand, enjoys security of tenure only for the duration of his employment contract. Like a regular employee, he cannot be terminated by his employer except for just or authorized causes sanctioned by law. However, when his contract expires, his employment automatically ends. There is no assurance of contract renewal. Thus, he is not assured of a retirement pay at age 65. (Note that I deliberately did not use the term “contractual employee” because the Department of Labor and Employment (DOLE) reserved this definition for fixed-term employees who are employed by local manpower agencies but deployed to service the needs of client-business-owners. I will discuss “contractual employment” under DOLE Department Order 18-02 in Part 2 of this article.)
Most employers would rather employ fixed-term employees than regular employees primarily because the former are deemed to have higher productivity than the latter. The fear of non-renewal of their employment contracts would drive fixed-term workers to become high performers. It keeps them on their toes. Regular employees, on the other hand, have the general tendency to become complacent, and therefore mediocre in their performance. This notion came from the exemplary performance of our overseas Filipino workers (OFWs) in foreign host countries as compared to the below average productivity of our local workers arrayed against the productivity of workers of other nationalities. This belief is strengthened by the fact that, under our present labor laws, the incompetence or low productivity of an employee is not a valid ground for his termination.
The problem is that when business-owners try to engage our local workers in a 2 to 3 year employment contract, the authorities are unreasonably fast in generalizing that the arrangement is a circumvention of the security of tenure under the Labor Code, now enshrined in the Constitution. These supposed fixed-term workers were adjudged as regular employees who cannot be terminated for their incompetence or for their low productivity. Hence, business-owners were forced to hire workers on a shorter term of 5 months, renewable for another 5 months. These became known as the notorious 5-5-5 practice, which was eventually outlawed by the Supreme Court. The effect was that companies were forced to resort to 5 months fixed-term contracts, without any renewal. Instead of staying with just a single company, workers were forced to hop from one employer to another every 5 months. Ironically, what was originally a pro-labor policy in the beginning produced anti-labor consequences in the end.
But security of tenure should not be confused with regular employment. With due respect to the Supreme Court, these are two separate and distinct concepts. Note that fixed-term employees also enjoy security of tenure. It is just that they are protected from illegal termination only for the duration of their contract. Regular employees, on the other hand, are protected until their compulsory retirement age (65). I am not against security of tenure. I consider it as a constitutional right of every worker. I am also not advocating for the abolition of regular employment. I am simply voicing out the indispensable requirement of any business enterprise for highly competent and productive manpower complement. Why do you think our fixed-term OFWs are much sought after by foreign employers?
Actually, I believe that regular employment, as it now stands, oftentimes gives only false hope to Filipino workers. Statistics show that most startup companies do not last for more than 10 years, and that the great majority of our workforce is employed by micro, small and medium enterprises, which come and go, and not by large companies like Philippine Airlines. Retirement pay therefore becomes an illusion to the vast majority of our workers. It makes no sense when the goose that lays the golden egg is prone to sickness and has a short lifespan.
