2014 Labor Law, Q2

Lucy was one of approximately 500 call center agents at Hambergis, Inc. She was hired as a contractual employee four years ago. Her contracts would be for a duration of five (5) months at a time, usually after a onemonth interval. Her re-hiring was contingent on her performance for the immediately preceding contract. Six (6) months after the expiration of her last contract, Lucy went to Hambergis personnel department to inquire why she was not yet being recalled to work. She was told that her performance during her last contract was “below average.” Lucy seeks your legal advice about her chances of getting her job back. What will your advice be? (4%)

Quick check

Under what condition is a fixed-term employment contract valid under Philippine labor law?

What is the legal effect of repeatedly rehiring an employee under consecutive five-month contracts for four years to perform core call center duties?

What statutory right protects regular employees from being terminated without just or authorized cause and procedural due process?

What procedural requirement must an employer satisfy before dismissing a regular employee for unsatisfactory performance?

What remedies are available to a regular employee who has been illegally dismissed from employment?

Learn more about these topics

1. Fixed-Term Contract Validity
Under Philippine labor jurisprudence, fixed-term employment contracts are valid only if the period was agreed upon knowingly and voluntarily without any force, duress, or improper pressure, and where the employer and employee dealt on more or less equal terms. When fixed-term contracts are repeatedly renewed for years to perform activities necessary or desirable in the usual business of the employer, the contractual arrangement is rendered void for being a scheme to circumvent security of tenure. In such cases, the fixed period is disregarded, and the worker is recognized as a regular employee by operation of law.

2. Security of Tenure
Security of tenure is a constitutionally guaranteed right ensuring that regular employees cannot be dismissed from service except for just or authorized causes established by law and after compliance with procedural due process. An employer cannot evade security of tenure by continuously subjecting workers to consecutive short-term contracts for the same essential position. Refusing to recall or rehire a regular worker upon the expiration of a short-term contract, under the pretext of contract expiration or unverified poor performance, constitutes illegal dismissal entitling the employee to reinstatement and full backwages.

3. Procedural Due Process
Before an employee can be validly dismissed for poor performance or inefficiency, the employer must strictly observe procedural due process requirements. The employer is required to issue a first written notice specifying the ground for potential termination and providing a reasonable opportunity to explain, followed by a formal hearing or investigation, and a second written notice of termination. Failure to afford these statutory notices renders the dismissal illegal. Arbitrarily dropping a regular worker from employment without written notice and a formal opportunity to be heard violates fundamental labor standards.

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The questions reproduced here are the official texts of the Philippine Bar Examinations, published by the Supreme Court. They are reproduced for study purposes.The suggested answers are the author’s own.

They are not official answers, have no connection with the Supreme Court, the Office of the Bar Confidant, or any bar review institution, and are not endorsed by any of them. Official answer keys, where released, should be preferred over anything here.Nothing on this page is legal advice, and reading it creates no lawyer-client relationship. Do not rely on any suggested answer in an actual legal matter. Consult counsel on your own facts.Suggested answers reflect the law and jurisprudence the author considers applicable as of the date shown.

Where a question comes from an earlier examination, the suggested answer applies the law as it now stands, which may differ from the law in force when the question was given, and may therefore differ from what would have been the correct answer at that time. Where the difference is material, the answer notes it.The practice scoring feature measures wording overlap with the suggested answer. It is not a grade, carries no official weight, and says nothing about whether your reasoning is sound.Errors are possible. If you find one, please tell me and I will correct it.Last reviewed: October 2026