Dear Attorney,

I recently encountered an issue involving the suspension of the security agency employed by my company. The agency was replaced with a new one, and the former agency informed us that we need to resign from them to claim our benefits. However, they mentioned that only the cash bond would be released and no other benefits. I am concerned if this is legally accurate. Could you please provide some legal advice on this matter?

Sincerely,
A Concerned Employee

Insights

In employment matters, particularly when a service provider, such as a security agency, is replaced, the legal entitlements of employees depend on several factors, including the terms of employment, the Labor Code of the Philippines, and any relevant Department of Labor and Employment (DOLE) regulations.

Termination and Separation Pay
According to the Labor Code of the Philippines, if an employee's services are terminated due to the cessation of operations of a business or company (in this case, a security agency), they may be entitled to separation pay. This applies if the termination is not due to any employee fault or resignation. Generally, separation pay is provided if the termination is classified as "authorized," meaning the employer ceased operations for a valid reason, such as company restructuring or financial losses.
Resignation and Benefits
The agency's statement that employees must resign to claim benefits raises a red flag. Under Philippine labor law, resignation is typically a voluntary act by the employee. If the employees are asked to resign without due cause or are not provided adequate compensation or notice, this could be considered constructive dismissal, which is illegal.

Upon resignation, employees are generally only entitled to unpaid wages, pro-rated 13th-month pay, and the return of their cash bond (if applicable). However, if the termination is initiated by the employer (such as in this case), the employees should be eligible for separation pay as well as other benefits like unused leave credits and other compensations under their employment contract.
DOLE Regulations on Security Agencies
The Department of Labor and Employment has specific rules governing security agencies. Under DOLE Department Order No. 174, series of 2017, employees who are terminated due to the end of a service contract between the agency and its client should not lose their regular employment status. The security agency must either transfer the employees to another client or provide termination benefits.
Cash Bond
Security agencies often require a cash bond from their guards, which should be returned to the employee upon termination or resignation, assuming all contractual obligations have been fulfilled. However, limiting the return to only the cash bond without addressing separation pay or other entitlements can be unlawful.

Employees who believe their rights are being violated may seek recourse by filing a complaint with DOLE or seeking assistance from labor unions or legal counsel.