Lina has been working as a steward with a Miami, U.S.A.-based Loyal Cruise Lines for the past 15 years. She was recruited by a local manning agency, Macapagal Shipping, and was made to sign a 10-month employment contract everytime she left for Miami. Macapagal Shipping paid for Lina’s round-trip travel expenses from Manila to Miami. Because of a food poisoning incident which happened during her last cruise assignment, Lina was not re-hired. Lina claims she has been illegally terminated and seeks separation pay. If you were the Labor Arbiter handlingthe case, how would you decide? (4%)
Suggested answer only. Not an official answer and not legal advice.
As the Labor Arbiter, I will dismiss Lina's complaint for illegal dismissal and deny her claim for separation pay. Under Philippine labor law, seafarers are contractual employees whose employment is fixed-term and governed by their POEA
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Quick check
Are seafarers and overseas Filipino workers capable of acquiring regular employment status under the Labor Code through continuous rehiring?
Seafarers are contractual employees governed by POEA contracts and do not acquire regular employment status regardless of continuous rehiring.
What is the legal effect of the expiration of a seafarer's POEA-approved fixed-term employment contract?
Expiration of a seafarer's fixed-term contract naturally terminates the employment relationship by operation of law.
Is a local manning agency legally obligated to re-hire a seafarer upon the expiration of her ten-month employment contract?
Upon the expiration of a fixed-term contract, the parties regain their freedom to contract, and non-rehiring is not a dismissal.
Which entity is solidarily liable with a foreign shipowner for contractual money claims of overseas seafarers?
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Is a seafarer entitled to separation pay when her employment contract naturally expires without being renewed by the foreign principal?
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Learn more about these topics
1. Seafarer Employment Status
Under Philippine labor law and established jurisprudence, seafarers and overseas Filipino workers are contractual employees whose employment is fixed-term. They are governed by the standard employment contracts approved by the Philippine Overseas Employment Administration (POEA) or Department of Migrant Workers. Regardless of the length of service or the continuous re-hiring of a seafarer over many years, seafarers do not acquire regular employment status under the Labor Code. Their employment is inherently bound to the specific duration agreed upon in their overseas employment contracts.
2. Contract Expiration Rules
The expiration of a seafarer's fixed-term employment contract automatically terminates the employer-employee relationship by operation of law. Non-renewal or non-rehiring of a seafarer upon contract expiration does not constitute dismissal, whether legal or illegal. Consequently, an overseas employer or local manning agency has no legal obligation to re-hire a seafarer whose contract has expired, as both parties regain their freedom of contract. The employee is likewise not entitled to separation pay upon the natural expiration of their fixed-term contract.
3. Manning Agency Liability
Local manning agencies are jointly and solidarily liable with foreign principal employers for all money claims arising from overseas employment contracts. However, this solidary liability attaches only to obligations that accrue during the effectivity of the contract or unexpired portion thereof in cases of illegal dismissal. Because the non-rehiring of a seafarer after the natural termination of their employment contract is not an actionable injury or illegal termination, no monetary liability or obligation to pay separation pay attaches to either the foreign principal or the local manning agency.