Regular Employment in Poultry Farms: Length of Service and Necessity of Work

The Supreme Court's 2018 decision in Abuda v. L. Natividad Poultry Farms (G.R. No. 200712) clarifies an important point in Philippine labor law: workers who render at least one year of service—even on a pakyaw or task basis—may be considered regular employees. The ruling also explains when maintenance work is "necessary and desirable" to a business, making workers entitled to security of tenure.

The Case: Workers vs. Poultry Farm

Thirty-five workers of L. Natividad Poultry Farms filed complaints for illegal dismissal and unpaid benefits. They claimed they had worked as maintenance personnel, feed mixers, and other roles for periods ranging from three to seventeen years. The farm, however, argued that the workers were employed by independent contractors—San Mateo General Services and Rodolfo Del Remedios—and not by the farm itself.

The Labor Arbiter initially dismissed the complaint for lack of employer-employee relationship. The NLRC and Court of Appeals later ruled that the contractors were engaged in "labor-only contracting," making them mere agents of the farm. However, both tribunals held that the maintenance personnel were not regular employees because carpentry and masonry work were not "necessary or desirable" to a poultry business.

The Issue

The central question was whether maintenance personnel in a poultry farm could be considered regular employees of the farm, entitling them to security of tenure and backwages upon illegal dismissal.

The Ruling: Two Paths to Regular Employment

The Supreme Court ruled in favor of the workers, declaring them regular employees. The Court explained that under Article 295 (formerly Article 280) of the Labor Code, an employee becomes regular in two ways:

First, by performing work "usually necessary or desirable" to the employer's business. The Court found that the workers' repair and maintenance of livestock houses, facilities, and sales outlets were indeed necessary to the farm's operations. The farm maintained several properties that required constant upkeep, making the workers' services indispensable.

Second, by rendering at least one year of service, whether continuous or broken. Even if the work were not considered "necessary," the Court emphasized that an employee who has served for at least one year becomes regular "with respect to the activity in which he is employed." Here, the workers served for three to seventeen years—far exceeding the one-year threshold.

Key Principles Established

The Court clarified several important points:

Pakyaw basis does not prevent regularization. A pakyaw or task-based arrangement defines only the manner of payment, not the employment relationship. Workers paid by results can still be regular employees if their employer exercises control over them.

Labor-only contractors are agents. When a contractor lacks substantial capital or investment in tools, equipment, or work premises, it is deemed a labor-only contractor. Such contractor is treated as a mere agent of the principal employer, who becomes directly responsible to the workers.

Length of service proves necessity. The necessity of work can be inferred from the length of time an employee has performed it. Repeated and continuous need for services over a year is sufficient evidence of indispensability.

Moral damages require more than illegal dismissal. Termination without just cause does not automatically entitle a worker to moral or exemplary damages. The worker must prove bad faith, fraud, or oppressive conduct by the employer.

Practical Takeaways

• Workers employed for at least one year—even intermittently or on a pakyaw basis—may be considered regular employees entitled to security of tenure.
• Maintenance and repair work can be "necessary and desirable" to a business if the business relies on facilities that require constant upkeep.
• Employers cannot use labor-only contracting arrangements to avoid their obligations to workers.
• The four-fold test—selection and engagement, payment of wages, power of dismissal, and control over conduct—determines the existence of an employer-employee relationship.
• Workers claiming illegal dismissal must first prove the fact of dismissal before the burden shifts to the employer.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.