S E N A T E  
Senate Bill No. 
452 
- 
INTRODUCED BY SEN. JINGGOY EJERCITO ESTRADA 
EXPLANATORY NOTE 
The competition necessitated by the integration of world markets has 
pushed domestic industries to devise various flexible work arrangements in order 
to survive. Unfortunately, the Labor Code provisions are not responsive to these 
changes. While two flexible forms of employment are recognized by the Labor 
Code, namely project and seasonal employment, the rights of workers under 
such arrangement required the intervention of the Supreme Court in the 
interpretation of Articles 280 and 281. 
It is therefore imperative to amend the Labor Code to institutionalize the 
parameters for these flexible forms of employments, thereby protecting the 
workers employed in these recognized forms of atypical employment in the Labor 
Code, 
Hence, the approval of this bill is earnestly sought. 
A 
ANGGO\( EJERCITO ESTRADA 
Senator 


S E N A T E  
I1?:ccI\lcI1 
INTRODUCED BY SEN. JINGGOY EJERCITO ESTRADA 
AN ACT 
PRESCRIBING WORK ARRANGEMENTS BASED ON SECURITY OF 
TENURE, AMENDING FOR THIS PURPOSE, ARTICLES 156, 157, 158, 159, 
160, 161, 162, 163, 164 AND 165 OF PRESIDENTIAL DECREE NUMBER 
FOUR HUNDRED FORTY TWO (PD 442), AS AMENDED, OTHERWISE 
KNOWN AS THE LABOR CODE OF THE PHILIPPINES 
Be it enacted by the Senate and the House of Representatives of the Philippines 
in Congress assembled: 
SECTION 1. Title. - This Act shall be called “The Security of Tenure 
Law of 2007.” 
SEC 2. Book 111 of Presidential Decree No. 442, as amended , otherwise 
known as The Labor Code of the Philippines, is hereby amended to include Title 
IV entitled “Security of Tenure”. The provisions of this Act shall comprise the new 
Articles 156-165 of the Labor Code. 
SEC. 3. Classification of Workers.- Article 156 shall read as follows: 
“Article 
156. Classification of 
workers.- Work 
arrangements based on security of tenure shall be as 
follows: (a) contracts with an indefinite period; and (b) 
contracts with a definite period. In general, an employment 
contract shall be for an indefinite period, unless otherwise 
stipulated and allowed by conditions stated in Article 158.” 
SEC. 4. Security of Tenure -Article 157 shall read as follows: 
“Article 157. Security of tenure. - Contracts with an 
indefinite period shall not be terminated except for just or 
authorized cause under Book VI. Contracts with a definite 
period shall not be terminated except: (a) for just cause of 
authorized cause under Book VI; and (b) upon expiration of 
the stipulated period.” 


SEC. 5. Contracts for definite period; when allowed - Article 158 shall 
“Article 158. Contracts for definite period; when 
allowed. - Contracts for a definite period shall be allowed 
only in the following situations: 
(a) 
Replacement of an employee who is temporarily 
absent; 
(b) 
Temporary increase in the volume of business, which 
in no case shall exceed six (6) months in a twelve (12) 
month period; 
(c) 
To meet expansion of a company’s activity, consisting 
of the launch of a new production line, product of service, 
which in no case shall be less than six (6) months nor more 
than three (3) years: Provided, That employees still hired 
after the contract for definite period shall be under a new 
contract for an indefinite period; 
(d) 
Part-time contracts, where the employee undertakes 
to render services for a number of hours of days less than 
two thirds (213) of the usual number of working hours for the 
same position in the establishment; 
(e) 
Construction work, in which case the duration of the 
project or a specific phase thereof shall be indicated in the 
contract and made known to the employee at the 
commencement of the employment relationship: Provided, 
That pertinent rules and regulations issued by the 
Department of 
Labor and Employment (DOLE) on 
employment in the construction industry shall continue to 
remain in full force and effect; 
(9 
Professional sports; 
(9) 
confidential, or technical positions; 
(h) 
Overseas Filipino Workers: Provided, That such 
OFWs work under contracts of employment consistent with 
Philippine Overseas Employment Authority (POEA) rules 
and regulations; 
(i) 
Officials of private academic institutions 
(j) 
Seasonal positions or jobs in the tourism, agriculture, 
and entertainment sectors: Provided, That the duration of the 
season shall be specified in the contract of employment and 
made known to the employee at the commencement of the 
employment relationship; or 
(k) 
Other cases where, based on the nature of the work 
to be performed or on the circumstances under which it is to 
be performed, and with no fraud, duress or coercion, 
practiced upon the worker, the employment relationship 
cannot be of indefinite duration.” 
read as follows: 
Corporate officers, and those occupying managerial, 


SEC. 6. Contracts for definite period; form and contents. - Article 159 
shall read as follows: 
“Article 159. Contracts for definite period; form and 
contents. - The contract for a definite period shall be in 
writing and signed by the employer and employee, stating 
the following: 
a. precise purpose of employment; 
b. name and qualifications of the employee; 
c. description of the job; 
d. wages and other terms and conditions of employment; 
e. date of expiry of the contract; and 
f. stipulations for renewal: Provided, That renewal must be 
once only, and the total duration of the contract, including 
renewal, may not exceed two (2) years: Provided further, 
That an employee for an indefinite period allowed to work 
after the expiry of the stipulated period without the benefit of 
a renewed contract shall be deemed engaged for an 
indefinite period. 
All of the foregoing contents of a contract for a definite 
period shall be made known to the employee at the 
commencement of the employment relationship. 
Every contract of employment for a definite period shall 
be made available by the employer upon written demand by 
the Secretary of Labor and Employment or hislher 
authorized representative. Failure to produce such a written 
contract upon due demand by the Secretary of hislher 
authorized representative or upon issuance of a subpoena 
duces tecum by the National Labor Relations Commission 
(NLRC) shall give rise to the presumption that the 
arrangement is for an indefinite period.” 
SEC. 7. Ratio between employees for an indefinite and a definite 
“Article 160. Ratio between employees for an 
indefinite and a definite period. - In no case shall the 
number of employees under contracts for definite period 
exceed thirty percent (30%) of the total number of rank-and- 
file employees. A violation of this provision shall result in the 
automatic conversion of all such arrangements into contracts 
for an indefinite period.” 
period. -Article 160 shall read as follows: 
SEC. 8. Rights and privileges of an employee for a definite or 
indefinite period. -Article 161 shall read as follows: 
‘Article 161. Rights and privileges of an employee for a 
definite or indefinite period. - An employee for a definite or 
indefinite period shall have the following rights and 
privileges: 
(a) 
safe and healthful working conditions; 


(b) 
labor standards, such as service incentive leave, rest 
days, overtime pay, holiday pay, and 13‘h month pay; 
(c) 
social security and welfare benefits; and 
(d) 
self-organization, collective bargaining, and peaceful 
concerted action. 
In addition, the Bureau of Internal Revenue (BIR) 
shall, in appropriate revenue regulations, grant employees 
for a definite period a privileged personal income tax 
exemption, which shall be higher than those provided in 
each income bracket based on existing schedules.” 
SEC. 9. Probationary status; nature.- Article 162 shall read as 
follows: 
“Article 162. Probationary status; nature. - A contract 
of employment may stipulate a probationary period to test 
the skills or abilities of a prospective employee for a definite 
or indefinite period. A probationary employee may be 
terminated for the following reasons: (a) just or authorized 
cause under Book VI; or (b) when the probationary 
employee fails to qualify as an employee for a definite or 
indefinite period in accordance with reasonable standards 
made known by the employer at the time of engagement.” 
SEC.10. Probationary status; periods. - Article 163 shall be read 
as follows: 
“Article 163. Probationary status; periods. - The 
duration of probationary employment varies according to the 
annual gross basic salary of the probationary employee. 
For employees with an annual gross basic salary 
below 
One 
Hundred 
Twenty 
Thousand 
Pesos 
(P120,000.00), the probationary period shall not exceed 
three (3) months. Employees with an annual gross basic 
salary of annual gross basic salary of One Hundred Twenty 
Thousand Pesos (P120,OOO.OO) may exceed three (3) 
months, and in no case shall such a probationary period be 
more than one (1) year. 
The probationary period of professors, instructors, 
and teachers shall be subject to law and standards 
established by the Department of Education (DepEd) and 
the Commission on Higher Education (CHED). 
For the purposed of this Act, ‘basic salary” shall refer 
to all remunerations or earnings paid by an employer for 
services rendered, but does not include allowances and 
monetary benefits which are not considered or integrated as 
part of the regular or basic salary, such as the case 
equivalent of unused vacation and sick leave credits, 
overtime, premium, night differential and holiday pay, and 
cost-of-living allowances.” 


SEC.ll. Non-diminution of status and benefits. - Article 164 
shall read as follows: 
“Article 164. Non-diminution of status and benefits. - 
There shall be no demotion in rank or diminution of pay or 
illegal dismissal of any person already employed upon the 
effectivity of this Act. Henceforth, regular employees as 
denied under the former Article 280 of the Labor Code shall 
be deemed under contracts for an indefinite period.” 
SEC. 12. Recruitment and placement. - Article 165 shall read as 
follows: 
“Article 165. Recruitment and placement. - For 
purposes of hiring employees for definite and indefinite 
periods, the services of private recruitment and placement 
agencies (PRPAs) shall be made available in accordance 
with DOLE rules and regulations.” 
SEC. 13. Effects of i//egal dismissaL Article 288 (formerly Article 
279) of the Labor Code is hereby amended to read as follows: 
“Article 287. Effect of illegal dismissal. -An employee 
who is unjustly dismissed from work shall be entitled to 
reinstatement without loss of seniority rights and other 
privileges and to his full back wages, inclusive of allowances, 
and to his other benefits or their monetary equivalent 
computed from the time his compensation was withheld form 
him up to the time of his actual reinstatement. 
If reinstatement is not possible, the unjustly dismissed 
employee engaged for an indefinite period shall be entitled 
to separation pay in the amount of one (1) month pay or at 
least one (1) month pay for every year of service, whichever 
is higher. For employees engaged for a definite period, the 
amount of separation pay shall be one (I) 
month pay or the 
remaining basic salary for the unexpired portion of the 
contract, whichever is higher.” 
SEC. 14. Repealing clause. - The provisions of Articles 289 and 
290 (formerly Articles 280 and 281) of the Labor Code are hereby 
repealed accordingly. All laws, presidential decrees, executive orders, 
presidential proclamations, rules and regulations or parts thereof contrary 
to or inconsistent with this Act are hereby repealed or modified 
accordingly. 
SEC. 15. Renumbering and rules and regulations. - The 
Department of Labor and Employment (DOLE) shall cause the 
renumbering of affected provisions of the Labor Code, as amended. The 
DOLE shall also promulgate the necessary rules and regulations to 
implement the provisions of this Act. 


SEC. 16. Separability clause. - if any part of provision of this Act, 
or the application thereof to any person or circumstance, is held invalid, 
the remaining provisions, or the application of such remaining provisions 
or parts thereof to other persons or circumstances, shall not be affected 
thereby. 
SEC. 17. Effectivity. - This Act shall take effect after two (2) weeks 
of publication in two (2) newspapers of national general circulation. 
Approved,