Letter to a Lawyer

Dear Attorney,

I hope this letter finds you well. I am writing to seek your legal advice regarding a matter of employment termination and entitlement to separation pay. I have been employed as a security guard under a security agency for six years now. Recently, there have been talks of changes within the agency that may lead to termination of employment, and I am concerned about whether I would be entitled to separation pay if my employment ends.

As I understand, there are certain rules and regulations under Philippine labor laws regarding separation pay. However, I am unsure if these apply to someone in my position as a security guard, especially considering my length of service with the agency. I would greatly appreciate your legal opinion on this matter, specifically:

Does my length of service of six years entitle me to separation pay if I am terminated by my security agency?
Under what circumstances can I expect to receive separation pay, if any, in the event of termination?
Are there any specific provisions under Philippine labor laws or regulations for security guards that may affect my entitlement to separation pay?

I look forward to your response and guidance on this issue. Your legal expertise will greatly assist me in understanding my rights as an employee in this situation.

Sincerely,
A Concerned Security Guard

Legal Article on the Entitlement to Separation Pay for Security Guards in the Philippines

Understanding Separation Pay Under Philippine Labor Laws

In the context of Philippine labor laws, separation pay is generally provided to an employee who has been involuntarily terminated from employment, provided that the termination falls under certain grounds as defined by the Labor Code. Separation pay is intended to mitigate the impact of losing one's job, especially if the termination is beyond the employee's control.

It is important to note that the right to separation pay is not absolute. Not all employees are entitled to it, as there are specific conditions and scenarios under which separation pay is granted. In this discussion, we will explore how these provisions apply specifically to security guards, who are employed under security agencies, as well as the nuances of the law that affect their entitlement to separation pay.

Separation Pay in the Context of Termination: The General Rule

The general rule, as outlined in the Labor Code of the Philippines (Presidential Decree No. 442), specifies that separation pay is required in cases of terminations that are for authorized causes. These authorized causes, under Article 298 of the Labor Code, include the following:

Installation of labor-saving devices: This occurs when the employer introduces technology or systems that result in a reduced need for employees.
Redundancy: Redundancy happens when the services of an employee are deemed superfluous, often due to restructuring, mergers, or changes in the company's operations.
Retrenchment to prevent losses: Retrenchment is the reduction of a company’s workforce in order to prevent financial losses. It must be based on a legitimate business reason, supported by evidence.
Closure or cessation of business: If the employer's business is closing down permanently or temporarily, separation pay may be due to the employee.
Disease or illness: When an employee contracts an illness that is incurable or prejudicial to the health of co-workers, the employer may validly terminate the employee for health reasons, but separation pay is typically required in this scenario.

For these types of terminations, the Labor Code prescribes that the affected employees are entitled to receive separation pay equivalent to at least one month’s salary or one-half month’s salary for every year of service, whichever is higher. The computation includes a fraction of at least six months as one whole year.

Security Guards and Their Employment Setup: Understanding the Unique Dynamics

Security guards, unlike many other employees, are often employed under the unique setup of a "manpower agency" or "security agency." This means that while the security guard may be deployed to various client sites, their actual employer remains the security agency that contracted them. The relationship between the guard and the client company is indirect; the client pays the security agency for services, and the agency, in turn, pays the guard.

Given this dynamic, it is critical to distinguish between the employer (the security agency) and the client company where the security guard is assigned. The issue of separation pay arises primarily between the security guard and the security agency, not the client company. Therefore, any separation pay owed must come from the security agency if the grounds for entitlement exist.

Entitlement to Separation Pay for Security Guards After Six Years of Service

In the context of security guards, the length of service—such as six years—does not automatically entitle the employee to separation pay upon termination. Rather, the grounds for termination and the nature of the termination determine whether separation pay is due.

The following are key scenarios under which a security guard employed for six years may or may not be entitled to separation pay:

Termination Due to Authorized Causes: If a security guard is terminated by the agency due to any of the authorized causes mentioned above—such as redundancy, closure of the business, or retrenchment—the guard will be entitled to separation pay as mandated by the Labor Code. In such cases, the guard’s length of service (six years) would be a factor in the computation of separation pay, but the grounds for termination are what entitles the guard to the payment.

For example, if the security agency loses a major client and decides to reduce its workforce (retrenchment), the security guards affected by this decision should receive separation pay equivalent to one month’s salary or half a month’s salary for every year of service, whichever is higher. In this case, a security guard with six years of service would receive six months' worth of salary as separation pay under the latter formula.
Termination for Just Causes: If the security guard is terminated for just causes under Article 297 of the Labor Code (e.g., serious misconduct, willful disobedience, gross and habitual neglect of duties, fraud, or other similar offenses), the security guard is not entitled to separation pay. Just cause terminations are grounded in fault or negligence on the part of the employee. Therefore, even if the security guard has rendered six or more years of service, separation pay would not be required if the termination is due to a just cause.

In one example, if a security guard is terminated for theft or gross misconduct, the agency is not obligated to provide separation pay, regardless of the guard’s length of service.
Termination Due to Expiration of the Contract: Another unique scenario in the case of security guards is the expiration of the contract between the client company and the security agency. The Supreme Court has ruled in several cases that the expiration of a service contract between a security agency and a client company does not automatically entitle a security guard to separation pay, as long as the security agency can reassign the security guard to another post.

In cases where the security guard is not reassigned and is instead terminated, the guard may be entitled to separation pay if the reason for non-reassignment is an authorized cause such as redundancy or retrenchment. However, if the agency can find alternative posts or assignments for the guard, no separation pay is required.

Jurisprudence on Security Guards and Separation Pay

Philippine jurisprudence provides several important rulings related to the entitlement of security guards to separation pay:

In Pantranco North Express, Inc. v. NLRC, the Supreme Court ruled that termination due to the cessation of the client’s business or the end of the security contract could entitle the security guard to separation pay if no reassignment was available. However, if reassignment is possible, no separation pay would be due.
In Nitto Enterprises v. NLRC, the Supreme Court emphasized that a security guard is entitled to separation pay if his termination is due to an authorized cause. The length of service, such as six years, is considered in the computation but does not automatically grant entitlement.
Aliling v. Felicisimo Enterprisers, Inc. held that the failure of the employer to provide an alternative post to a security guard after the expiration of the client contract can lead to entitlement to separation pay if the termination was due to the agency’s inability to assign the employee to another post.

Conclusion

In summary, a security guard with six years of service is not automatically entitled to separation pay upon termination. Entitlement depends on the grounds for termination, whether it falls under authorized or just causes as defined by the Labor Code. If the termination is due to authorized causes, such as redundancy, retrenchment, or the closure of the security agency, the guard will be entitled to separation pay. However, if the termination is for just causes, such as misconduct or negligence, separation pay is not required.

In the case of security agencies, the expiration of a client contract alone does not entitle the guard to separation pay if the agency can reassign the guard to another post. If reassignment is not possible and the termination falls under an authorized cause, separation pay must be provided.

Given the complexity of employment termination and the nuances of separation pay entitlement, it is advisable for security guards to seek legal advice to ensure that their rights are protected in the event of job loss.