How Length of Service Can Transform a Probationary Employee into a Regular One

G.R. No. 111651, March 15, 1996

Imagine working diligently for a company for years, only to be suddenly dismissed under the guise of a probationary period. This scenario highlights the critical distinction between probationary and regular employment, a distinction often blurred to the detriment of Filipino workers. The Supreme Court case of Bustamante vs. National Labor Relations Commission clarifies how extended service, even if broken, can elevate an employee to regular status, providing them with greater job security and benefits.

This case revolves around the illegal dismissal of several employees of Evergreen Farms, Inc., who were initially hired as probationary laborers and harvesters. The central legal question is whether these employees, despite their probationary contracts, had attained regular employee status due to their length of service and the nature of their work.

Legal Context: Regular vs. Casual Employment Under the Labor Code

The Philippine Labor Code distinguishes between regular and casual employees, with regular employees enjoying greater protection against unjust dismissal. Article 280 of the Labor Code is the cornerstone of this distinction, defining the two categories:

“ART. 280. Regular and Casual Employment. – The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been 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 services 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, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists.”

This provision essentially states that if an employee performs tasks essential to the employer’s business, or if they have worked for at least one year (continuously or intermittently), they are considered regular employees. The intent is to prevent employers from perpetually keeping employees on probationary status to avoid providing benefits and security of tenure.

For example, a janitor hired by a shopping mall is performing a task that is necessary for the business to operate. If that janitor is repeatedly hired for short periods of time, but the total time adds up to more than one year, that janitor is considered a regular employee.

Case Breakdown: Bustamante vs. NLRC

The story begins with Osmalik Bustamante and his co-workers, laborers at Evergreen Farms, Inc., a banana plantation. They were hired under six-month contracts, but many had previously worked for the company intermittently for several years. In June 1990, their employment was terminated, allegedly due to poor performance linked to their age.

Feeling unjustly dismissed, the workers filed a complaint with the National Labor Relations Commission (NLRC). The case unfolded as follows:

• Labor Arbiter’s Decision: The Labor Arbiter ruled in favor of the employees, declaring their dismissal illegal and ordering reinstatement with backwages.
• NLRC’s Initial Ruling: The NLRC initially upheld the Labor Arbiter’s decision.
• NLRC’s Reconsideration: Upon motion for reconsideration by Evergreen Farms, the NLRC reversed its decision on the backwages, arguing that the termination wasn’t in bad faith.

The Supreme Court ultimately sided with the employees. The Court emphasized the importance of Article 280 of the Labor Code and criticized Evergreen Farms for using probationary contracts as a “chicanery” to deny the workers their rights. The Court stated:

“If at all significant, the contract for probationary employment was utilized by respondent company as a chicanery to deny petitioners their status as regular employees and to evade paying them the benefits attached to such status.”

The Court further noted that the repeated hiring and rehiring of the employees indicated bad faith on the part of the employer. The court reasoned that:

“The act of hiring and re-hiring the petitioners over a period of time without considering them as regular employees evidences bad faith on the part of private respondent.”

The Supreme Court reinstated the award of backwages, underscoring the employees’ right to full compensation from the time of their illegal dismissal until their reinstatement.

Practical Implications: Protecting Employee Rights

This case reinforces the principle that employers cannot circumvent labor laws by repeatedly hiring employees on short-term contracts. Length of service and the nature of the work performed are key factors in determining employment status.

Key Lessons:

• Length of Service Matters: Even broken or non-continuous service exceeding one year can lead to regular employment status.
• Nature of Work is Crucial: If the employee performs tasks necessary for the employer’s business, it strengthens their claim to regular employment.
• Probationary Contracts Can Be Abused: Courts scrutinize probationary contracts used to evade regularizing employees.

For businesses, it’s crucial to properly classify employees based on their duties and length of service. Regularly assess employment contracts to ensure compliance with labor laws. Failure to do so can result in costly legal battles and damage to the company’s reputation.

For employees, meticulously document your work history, including dates of employment, job descriptions, and any contracts signed. This documentation can be invaluable in asserting your rights if your employment is terminated.

Frequently Asked Questions (FAQs)

Q: What is the difference between a probationary employee and a regular employee?

A: A probationary employee is hired for a trial period to determine their suitability for regular employment. A regular employee has completed this trial period and enjoys greater job security and benefits.

Q: How long is the probationary period in the Philippines?

A: Generally, the probationary period should not exceed six months, unless a longer period is justified by the nature of the work.

Q: Can an employer repeatedly hire an employee on a probationary basis?

A: No, repeatedly hiring an employee on a probationary basis to avoid regularization is considered illegal and is viewed as bad faith.

Q: What are backwages?

A: Backwages are the wages an employee would have earned had they not been illegally dismissed. They are awarded to compensate for lost income during the period of illegal dismissal.

Q: What should I do if I believe I have been illegally dismissed?

A: Consult with a labor lawyer as soon as possible. Gather all relevant documents, including your employment contract, pay slips, and any termination letters.

ASG Law specializes in labor law and employment disputes. Contact us or email hello@asglawpartners.com to schedule a consultation.