Employee Rights on Contract Non-Renewal and Transfer Offers (Philippines)

A practical, everything-you-need guide for private-sector workers and employers in the Philippines. (General information only—not legal advice.)

1) The legal backbone (in plain English)

Security of tenure (Labor Code, Art. 294 [renumbered]): you can only be removed for just causes (misconduct, etc.) with due process, or for authorized causes (redundancy, retrenchment, closure, disease) with statutory notice and separation pay. Expiry of a lawful fixed term is neither just nor authorized cause—it’s simply the contract ending.
Employment types (Art. 295 [renumbered]):
- Regular – you do work usually necessary or desirable to the business. You enjoy full security of tenure.
- Probationary – up to 6 months (unless a different period is set by law for the role, e.g., teachers). Written standards for regularization must be communicated at hiring; otherwise you’re deemed regular.
- Project – tied to a specific project with a defined end.
- Seasonal – hired for a season; employment is suspended between seasons.
- Casual – work not usually necessary or desirable; becomes regular after 1 year of service (continuous or broken) doing the same activity.
Fixed-term contracts are valid if knowingly and voluntarily agreed upon and not used to circumvent security of tenure (the Supreme Court doctrine commonly referenced from Brent School v. Zamora). Serial renewals that mask a regular job can be struck down.

2) Non-renewal of contracts: What it is—and what it isn’t

A) When non-renewal is generally lawful

True fixed-term ends on the date stated. No “dismissal” occurs; separation pay is not required (unless a law, CBA, or company policy says otherwise).
Project/seasonal ends upon project completion or end of season. Again, no separation pay is due solely for completion/end (unless agreed), but employers typically file standard termination reports with DOLE for compliance.

B) When non-renewal may be illegal

The fixed term was used to avoid regularization for work that is necessary/desirable and continues year-round (classic “endo” scenario).
The employee is actually regular by law (e.g., >1 year doing the same essential work), despite the label.
Non-renewal is tainted by discrimination or retaliation (pregnancy, age, union activity, whistleblowing, filing complaints, etc.).
For probationary employees: standards for regularization were not given in writing at hiring, or the employee met the standards but was still not regularized.

C) Due process & notices

Just causes (misconduct, willful disobedience, fraud, etc.): Two-notice rule + hearing/opportunity to explain.
Authorized causes (redundancy, retrenchment/closure not due to serious losses, installation of labor-saving devices, disease): 30-day prior written notice to both employee and DOLE + separation pay (see below).
Expiry of a valid fixed term/project/season: formal “due process” notices are not required by law, but clear written notice of non-renewal is good practice and helps avoid disputes.

3) Money and documents on exit

A) What you should receive (even on plain non-renewal)

Unpaid wages up to last day.
Pro-rated 13th month pay (PD 851) for rank-and-file.
Conversion of unused Service Incentive Leave (generally 5 days/year after 1 year of service), unless a CBA/policy already grants a better leave package.
Any agreed allowances, overtime/holiday differentials, and tax adjustments.
Certificate of Employment (COE)—must be issued within 3 days from request (per DOLE labor advisories).
Final pay timeline: as a rule of thumb, within 30 days from separation (per DOLE advisories or company policy, whichever is earlier).

B) When separation pay applies (not for plain expiry)

Redundancy / installation of labor-saving devices: at least 1 month pay or 1 month per year of service, whichever is higher.
Retrenchment to prevent losses / closure not due to serious losses / termination due to disease: at least 1 month pay or 1/2 month per year of service, whichever is higher.
A fraction of 6 months is typically counted as one whole year in computing years of service.

4) Transfer offers: rights, limits, and traps

A) Transfers within the same employer

Part of management prerogative if done in good faith and without demotion in rank/pay or diminution of benefits.
Legitimate reasons: business reorganization, operational needs, avoiding redundancy.
Constructive dismissal risks for the employer if a transfer is:
- Punitive, whimsical, or in bad faith;
- A clear demotion or involves material pay/benefit cuts (including guaranteed allowances, fixed shift premiums, tenure-based perks);
- Unreasonably distant or unduly harsh given the employee’s health, family, or safety circumstances, without valid business necessity or reasonable accommodation.

Your options: Ask for the written terms (role, location, schedule, pay, allowances, reporting line, duration). You may accept, negotiate (e.g., relocation or WFH allowance, transitional pay), or object in writing with reasons. Unjustified refusal of a lawful transfer can be treated as insubordination, so document why the transfer is unreasonable if you plan to refuse.

B) Transfers to a different company (affiliate, contractor, buyer)

A change of employer requires your consent. You cannot be forced to move to a new employer without agreement.
If you agree to be absorbed, clarify whether tenure is carried over, benefits are bridged, and who pays any gaps.
If you decline and the original employer closes or eliminates your role, your rights revert to authorized-cause rules (notice + separation pay, as applicable).

C) Transfers in contracting/subcontracting set-ups

If you’re employed by a legitimate contractor (DOLE-compliant), your employer is the contractor—not the client (“principal”).
When a client contract ends, you may be placed on “off-detail”/floating status (temporary suspension) for up to 6 months while the contractor looks for reassignment. No wages are due during bona fide suspension.
- If no reassignment within 6 months, the relationship is typically treated as terminated for authorized cause—triggering separation pay.
- If you unreasonably refuse a comparable reassignment, you may weaken claims for separation pay.
Labor-only contracting (contractor has no substantial capital/investment and/or lacks control; workers are doing core business of principal) is prohibited. If found, the principal can be deemed your true employer—expanding your rights (including security of tenure and benefits).

D) Mergers & acquisitions quick guide

Stock sale (ownership of the corporation changes): employer remains the same entity; employment continues; no separation pay is due solely because of the sale.
Asset sale / closure of the selling company: the seller may lawfully terminate for closure (authorized cause) with separation pay; the buyer has no legal duty to absorb, though it can choose to.

5) Special protections you should know

Pregnancy & maternity: Non-renewal because of pregnancy or childbirth is illegal discrimination. The Expanded Maternity Leave Law (RA 11210) entitles eligible workers to paid leave benefits; benefits may still be claimable even if the contract ends, subject to SSS/agency rules and contributions.
Anti-Age Discrimination (RA 10911), Magna Carta of Women (RA 9710), Solo Parents Welfare Act (RA 11861, amending RA 8972), Anti-Sexual Harassment and Safe Spaces Act: non-renewal based on protected characteristics or for reporting harassment can be struck as illegal.
No diminution of benefits: Employers can’t unilaterally reduce benefits that have ripened into company practice.
Telecommuting Act (RA 11165): remote work needs mutual consent; switching to/from WFH is generally not a unilateral right unless there’s a valid company policy or a lawful, reasonable order.

6) Probationary specifics at non-renewal

If you’re probationary, the employer may end employment within the 6-month period for failure to meet written standards—but it must:
- Show the standards were given at hiring; and
- Observe due process for just-cause-type terminations (notice and opportunity to explain).
If probation lapses without action and you continue working, you normally become regular.
If you met the standards (or the standards were never given), non-renewal at 6 months can amount to illegal dismissal.

7) What to do when you receive a non-renewal or transfer offer

For employees

Ask for it in writing: contract end date, reason, and any offer (new role/site/employer) with full terms.
Audit your pay: salaries, differentials, 13th month, SIL conversion, allowances, tax corrections.
Ask for your COE (within 3 days of request) and the final pay timeline (generally within 30 days).
Check separation pay triggers: Is this redundancy/retrenchment/closure/disease? If yes, compute statutory separation pay.
Mind quitclaims: Don’t sign if the consideration is unconscionably low or you’re under duress. You can negotiate language and amounts.
If you suspect illegality (e.g., sham fixed term, discrimination), document everything and consider filing:
- Single-Entry Approach (SEnA) request for DOLE conciliation; or
- Illegal dismissal complaint (NLRC/Arbiter) seeking reinstatement with backwages or separation pay in lieu, plus damages/attorney’s fees when warranted.

For employers

Use the right basis: term expiry vs. authorized cause; don’t mix them up.
Paper the file: show the valid fixed term (and that it wasn’t to evade regularization), or the authorized cause with 30-day notices (employee + DOLE) and separation pay computation.
Transfers: ensure good-faith business reasons, no demotion/diminution, and reasonable logistics. For inter-company moves, obtain consent.
Final pay & COE: meet DOLE advisory timelines and be consistent with your policies/CBA.

8) Quick decision map

Your contract ended by date/project/season → Final pay + COE; no separation pay unless required by law/policy/CBA. → If you were actually regular or non-renewal was discriminatory → consider illegal dismissal remedies.
You were offered a transfer → Same employer + no demotion/diminution + good faith → generally valid; you can negotiate terms. → Different employer (affiliate/contractor/buyer) → your consent is needed; if you refuse and your role is eliminated/closed, check authorized-cause rights.
Contractor arrangement, client contract ended → Floating status up to 6 months is allowed; if no reassignment after that → separation pay as authorized-cause termination.

9) Handy formulas & timelines (rule-of-thumb)

Separation pay
- Redundancy/Labor-saving devices: max(1 month, 1 month × years of service)
- Retrenchment/Closure not due to serious losses/Disease: max(1 month, 0.5 month × years of service)
- ≥ 6-month fraction = 1 year for computation.
Final pay: target within 30 days from separation (check policy/CBA for earlier release).
COE: within 3 days of request.
Probationary period: generally 6 months; standards must be given at hiring.

10) FAQs

Q: Can my employer keep renewing 5-month contracts forever? A: Not lawfully to avoid regularization. Courts look at the real work you do and the pattern of renewals. If the job is continuous and essential, you may be deemed regular despite labels.

Q: I’m pregnant and my fixed term wasn’t renewed. Is that legal? A: If pregnancy is the real reason, that’s illegal discrimination. If a genuine fixed term ended for legitimate reasons unrelated to pregnancy, the expiry itself is not illegal.

Q: Do I have to accept a transfer to a far province? A: Not if it’s unreasonable, vindictive, or a demotion/diminution. But refusing a lawful transfer without valid reason can be insubordination. Get the justification and terms in writing.

Q: The contractor put me on “floating” after the client pulled out. How long? A: Up to 6 months. After that, no reassignment typically means authorized-cause termination with separation pay.

11) Final reminders

Labels don’t control—facts do. Courts pierce through titles like “contractual” or “project” if the work is regular and continuous.
Write everything down. Request written notices, keep copies, and send your responses by email/registered mail.
CBA/company policy can enhance (not reduce) statutory rights—always check them.

If you want, tell me your exact situation (dates, contract type, role, any offers made), and I’ll map your likely entitlements step-by-step.