Understanding Constructive Dismissal: Protecting Your Rights as an Employee

When an employer makes working conditions impossible or unreasonably withholds work, the law may treat the situation as a "constructive dismissal" — a termination disguised as something else. The Supreme Court's 2020 ruling in Ador v. Jamila and Company Security Services, Inc. (G.R. No. 245422) clarifies how this doctrine applies, particularly for security guards placed on "floating status." The case offers important lessons for every employee about what constitutes constructive dismissal and the remedies available.

What Is Constructive Dismissal?

Constructive dismissal occurs when an employer's actions — short of an outright firing — effectively force an employee to resign or make continued employment impossible. In the security agency context, this often involves "floating status" or "off-detail," where a guard is placed between assignments without work or pay.

The Supreme Court, citing Tatel v. JLFP Investigation Security Agency, Inc., explained that floating status is the period when security guards wait between assignments. This happens when a client does not renew its contract with the agency or requests replacement of guards. During this time, the guard receives no salary. Floating status does not automatically constitute dismissal — but only if it does not last beyond a reasonable time.

The Six-Month Rule

The Court applied Article 292 (formerly Article 286) of the Labor Code to set the maximum period for floating status at six months. This provision states that employment is not deemed terminated during a bona fide suspension of business operations not exceeding six months.

If a security guard remains on floating status for more than six months, the law presumes constructive dismissal. In Ador, the guard was placed on floating status from May 12, 2012 to April 11, 2013 — nearly one year. The security agency only offered him work after this period had already exceeded the legal limit.

When "Expired Documents" Is a False Excuse

The security agency in Ador argued it could not assign the guard because his license had expired. The Court found this claim false. Records showed his license was valid until March 29, 2015. The agency had misled the guard into believing he needed to renew documents that were still current.

The Court cited Salvaloza v. NLRC, where a similar excuse failed because the agency could not prove the license had actually expired. The lesson: an employer cannot use a fabricated reason to keep an employee on indefinite floating status.

General Return-to-Work Orders Are Not Enough

The agency also claimed the guard was dismissed for insubordination — ignoring three notices to report for work. The Court rejected this. The notices were sent late via registered mail, and the guard actually reported to the office when he received them.

More importantly, the notices were general return-to-work orders that failed to specify details required under DOLE Department Order No. 14, Series of 2001 (DO 14-01). Section 5.2 requires duty detail orders to state the job description, hours, work shift, and applicable pay rates. The notices in Ador merely told the guard to report to the head office — they did not identify any specific client or assignment.

Citing Padilla v. Airborne Security Service, Inc., the Court held that such vague notices are a cover-up for constructive dismissal. For insubordination to justify termination, two elements must exist: (1) the employee's conduct was willful, showing a wrongful and perverse attitude; and (2) the order violated was reasonable, lawful, made known to the employee, and related to his duties. Neither element was present.

Remedies for Constructively Dismissed Employees

An employee found to be constructively dismissed is entitled to:

• Backwages computed from the date the employee was unjustly relieved from duty — in this case, from the start of the floating status
• Separation pay of one month salary per year of service, when reinstatement is no longer practicable due to strained relations
• Attorney's fees equivalent to ten percent of the monetary award

The Court also clarified that corporate officers are not personally liable for illegal dismissal unless they acted in bad faith. Only the employer corporation bears liability in ordinary cases.

Practical Takeaways

• Floating status beyond six months is constructive dismissal. If a security agency (or any employer) withholds work for more than six months without valid justification, the employee may claim constructive dismissal.
• Verify document requirements. An employer cannot use expired licenses or clearances as an excuse if those documents are actually still valid. Employees should keep copies of their licenses and certifications.
• General return-to-work orders are suspect. A notice that merely says "report to the office" without specifying the assignment details may be a cover-up for constructive dismissal.
• Insubordination requires a valid, specific order. An employee cannot be dismissed for disobeying an order that was unreasonable, vague, or not properly communicated.
• Act promptly. An employee who believes they have been constructively dismissed should file a complaint with the NLRC without delay, as monetary awards are computed from the date of dismissal.

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