What will I do if my employer did not give me an employment contract? How will I determine my employment status? Can I immediately leave my job even without an employment contract?
A friend named Martin once called asking for legal advice in relation to his current job.
Martin is a new civil engineer. His first work is in a construction firm as a junior engineer. Eight months into his employment, another company called him to offer a job with better benefits and a promising career path.
Martin asked whether he could immediately file his resignation from his current job. He added that despite working for eight months, his employer never gave him a copy of his employment contract.
Let’s see if we can help Martin sort out his situation.
A written employment contract is desirable but not required
An employment contract is an agreement between the employer and the employee which contains the terms and conditions of the employment.
An employment contract is a form of a consensual contract. This means that the parties to the agreement only need to give their consent to the proposed agreement. This agreement can be verbal.
However, it is common to have written employment contracts where each party has his own copy of the agreement.
Indeed, it is even desirable for the employer’s own interest to state in writing the terms of the agreement.
Why is an employment contract desirable?
The law presumes an individual to be a regular employee in the absence of any proof stating otherwise.
A regular employee has superior rights compared to other types of employees, for example, a probationary employee. A regular employee has a security of tenure.
Without any written agreement, the employer exposes himself to a number of liabilities in favor of the employee.
This presumption is in line with the intent of the Labor Code:
Article 4. Construction in favor of labor. All doubts in the implementation and interpretation of the provisions of this Code, including its implementing rules and regulations, shall be resolved in favor of labor.
What is the required format for the employment contract?
The law does not require any form or template of an employment contract, much less that it be in writing.
To summarize, an employment contract is an agreement between the parties. A written employment contract embodies this agreement. The former is essential while the latter is only desirable.
But even without a written employment contract, an employee can still show that his boss has employed him.
Four-fold Test
In labor law, courts and labor tribunals use the so-called four-fold test to determine whether an employer-employee relationship exists.
True to its name, this test has four (4) prongs to consider.
The first prong is the power of selection and engagement of the employee. This basically asks who hires you or who exercises such power to hire?
Second is the determination of the payment of wages. Who pays your wages and other benefits?
Third comes the power of dismissal. This is self-explanatory. Someone who hires you can surely fire you too.
Lastly is the control test, which is the employer’s power to control the employee on the means and methods by which the work is accomplished. Are there rules in place such as schedule of the workweek, place of duty, prescribed attire for fieldwork, etc.? This test demonstrates the level of control someone has over his workers.
The control test is the most important prong. More often, satisfying it alone can establish an employer-employee relationship.
The underlying facts and circumstances of a particular worker will be tested against these prongs despite the absence of any written employment contract. Indeed, even a written contract disclaiming that no employment relationship exists can still be tested against the four-fold test to show otherwise.
Martin’s case
For example, if we apply this test to Martin’s case, there is a likelihood that an employer-employee relationship in fact exists.
It is clear that the construction firm hired Martin as a junior engineer. This firm also paid him his monthly wages and can exercise the power to fire him, if warranted. Finally, the firm controls how Martin performs his job towards the accomplishment of the intended results through its daily supervision of Martin’s outputs. The firm’s rules and regulations also indicate the control exercised by it towards Martin and his colleagues.
After establishing the employer-employee relationship, the question turns to the nature of employment.
It is the law that determines the nature of employment
The nature or classification of one’s employment may be regular, probationary, casual, seasonal, or project-based. This will depend on what the parties stated in their written agreement, or if none, in the facts and circumstances behind one’s employment.
Whether or not a written employment contract exists, it is the law, which finally settles one’s employment status.
On multiple occasions, the Supreme Court has consistently stated this bedrock principle in labor law:
“The employment status of a person is defined and prescribed by law and not by what the parties say it should be. Equally important to consider is that a contract of employment is impressed with public interest such that labor contracts must yield to the common good. Thus, provisions of applicable statutes are deemed written into the contract, and the parties are not at liberty to insulate themselves and their relationships from the impact of labor laws and regulations by simply contracting with each other.” (Price v. Innodata Phils. Inc., G.R. No. 178505, September 30, 2008)
Parties to a contract are given the liberty to agree among themselves and state in their contract the terms of their agreement, provided they do so lawfully. In case of dispute between them, the laws in place will decide, especially on the nature of employment.
It is important to be clear about the nature of one’s employment because each classification corresponds to certain entitlements, rights and obligations, duration, and manner of terminating the employment.
Right to terminate employment
In any case, an employee has every right to terminate his employment.
The Labor Code states, in part:
Article 300. Termination by employee.- An employee may terminate without just cause the employee-employer relationship by serving a written notice on the employer at least one (1) month in advance. The employer upon whom no such notice was served may hold the employee liable for damages.
But this right should not be exercised so as to cause damage to the employer. If needed, the employer may ask the employer to do a proper turnover before the resignation becomes effective.
Resignation is a matter which the employee alone can decide. There are numerous reasons for reaching this significant career leap. The existence or absence of a written employment contract in no way controls his ultimate decision.
Wrap Up
Hope you found these things helpful. If, despite these things to consider, you still feel that resignation is the right decision, then go for it! Life's too short to be stuck on something wrong for you. Just make it as frictionless as possible.
I’m sure you may have other questions related to resignation, stay tuned, I’m preparing more articles and materials to help you out during this time. I’ll keep you posted.
Additional Resouce if you’re thinking of resigning
I hope this was able to help you understand resignation better, but chances are, you still have questions. Click here for additional resources which I think can help you, as well as a preview video. Go to info.legalguide.ph/resignation to learn more.
