Introduction

The construction industry in the Philippines is one of the most labor-intensive sectors, employing hundreds of thousands of workers across varying project durations and employment arrangements. Because construction work is often project-based, the Department of Labor and Employment (DOLE) provides specific rules governing employee benefits, separation pay, and final pay. Understanding these rights and obligations is crucial for both employers and workers to ensure compliance with Philippine labor laws.

Legal Basis

The primary legal framework includes:

Labor Code of the Philippines, as amended;
Department Order No. 19, Series of 1993 (Guidelines Governing the Employment of Workers in the Construction Industry);
Department Order No. 150, Series of 2016 (Revised Guidelines Governing the Employment of Workers in the Construction Industry);
Labor Advisory No. 6, Series of 2020 (Guidelines on Final Pay and Issuance of Certificate of Employment);
Relevant DOLE and Supreme Court rulings interpreting employment status and benefits in the construction industry.

Nature of Employment in Construction

1. Regular vs. Project-Based Employment

Construction workers are typically hired as project employees, meaning their employment is tied to the completion of a specific project or a defined phase of work. Upon project completion, the employment relationship is automatically terminated.

However, if a worker is repeatedly rehired and continuously performs tasks necessary and desirable to the employer’s business, the worker may be deemed a regular employee, entitled to greater job security and benefits.

2. Probationary and Regularization

While project employment is common, some workers may be probationary or regular employees—especially those performing ongoing administrative or maintenance work within construction firms.

Rights and Benefits During Employment

Construction workers, whether project-based or regular, are entitled to the following statutory benefits during their period of employment:

Minimum Wage – as prescribed by the Regional Tripartite Wages and Productivity Board (RTWPB).
13th Month Pay – mandated under Presidential Decree No. 851.
Overtime Pay, Night Shift Differential, and Holiday Pay – under Articles 87–93 of the Labor Code.
Service Incentive Leave (SIL) – at least five (5) days per year, unless already covered by an equivalent or better benefit.
Social Security, PhilHealth, and Pag-IBIG Contributions – compulsory for all covered employees.

Resignation and Notice Requirement

Under Article 300 [formerly 285] of the Labor Code, an employee may terminate his or her employment by giving at least 30 days’ written notice to the employer. This allows proper turnover and ensures that both parties can settle financial obligations.

Failure to provide proper notice may affect entitlement to certain benefits or delay the release of final pay, though earned wages cannot be forfeited.

Final Pay (Last Pay) Upon Resignation

1. Definition

“Final pay” refers to all compensation due to an employee upon termination of employment, regardless of the cause (resignation, project completion, or dismissal).

2. DOLE Requirement

Under Labor Advisory No. 6, Series of 2020, employers must release the final pay within 30 calendar days from the date of separation, unless a more favorable company policy, contract, or collective bargaining agreement (CBA) provides otherwise.

3. Components of Final Pay

The final pay includes:

Unpaid wages or salaries up to the last day of work.
Pro-rated 13th month pay for the portion of the year worked.
Unused Service Incentive Leave (SIL) conversion to cash.
Deductions or adjustments, if any (e.g., cash advances, unreturned tools).
Separation pay, if applicable (see below).

Separation Pay: When Applicable

Construction workers who resign voluntarily are not entitled to separation pay, except when their contract or company policy grants it. However, separation pay is required by law if the termination is due to authorized causes, such as:

Installation of labor-saving devices
Redundancy
Retrenchment to prevent losses
Closure or cessation of operations
Illness preventing further work

Under Articles 298–299 of the Labor Code, the amount of separation pay is generally one month’s pay or one-half month’s pay per year of service, depending on the cause.

For project-based workers, the completion of a project is not an authorized cause but a valid termination by nature of employment; hence, no separation pay is due unless stipulated otherwise in the contract.

Certificate of Employment

Per Labor Advisory No. 6-2020, employers are also required to issue a Certificate of Employment (COE) upon the employee’s request. This document must be released within three (3) days from the date of the request, stating the duration of employment and the nature of work performed.

DOLE Inspection and Complaints

If a construction worker’s benefits or final pay are withheld beyond the 30-day period, the worker may:

File a complaint or request for assistance (RFA) with the nearest DOLE Field Office;
Pursue a claim through the Single Entry Approach (SEnA) for mediation;
If unresolved, escalate the case to the National Labor Relations Commission (NLRC) for adjudication.

Best Practices for Employers

Clearly define employment status (project, probationary, or regular) in all contracts.
Maintain accurate timekeeping and payroll records.
Ensure prompt remittance of government contributions.
Release final pay and COE within the DOLE-prescribed timelines.
Avoid repeated project rehiring without proper termination and documentation, as it may result in regularization.

Conclusion

Construction workers in the Philippines, whether project-based or regular, are protected under DOLE’s framework for fair compensation and benefits. While voluntary resignation does not automatically entitle a worker to separation pay, final pay—including earned wages, prorated benefits, and unused leave—is a guaranteed right. Employers in the construction industry must comply strictly with DOLE’s 30-day rule for releasing final pay and ensure transparency in all employment arrangements to avoid labor disputes.