I. Why the “Date Hired” Question Matters

In Philippine workplaces, employees are often first engaged under labels like “contractual,” “project-based,” “probationary,” “fixed-term,” “agency,” or “consultant,” and later “regularized.” When separation happens—whether by redundancy, retrenchment, closure, resignation, end-of-contract, or dismissal—two money issues commonly collide:

Separation Pay (when the law, a CBA, or company policy requires it), which depends heavily on length of service; and
Final Pay (the final settlement of all amounts due), which often involves prorations and conversions where service duration and accrual rules matter.

The core dispute is usually this: Does the “date hired” start from the first day the person rendered work, or only from the date of regularization (or the latest contract)?

In many situations, Philippine labor law treats regularization as a change of employment status, not a new employment relationship—meaning the legally significant “date hired” is often the first day of actual employment, not the date a regularization letter was issued.

But that conclusion depends on a threshold question: Was there a real employer–employee relationship during the earlier “contractual” period, and with whom?

II. Legal Framework You Must Know

A. Constitutional and statutory anchors

The Constitution protects security of tenure: employees cannot be dismissed except for a just or authorized cause and with due process.
The Labor Code provisions on employment classifications and termination rules drive the analysis. Many decisions still cite the old article numbers; the renumbered equivalents (under R.A. No. 10395) are widely used today:
- Regular employment: Article 295 (formerly Art. 280)
- Probationary employment: Article 296 (formerly Art. 281)
- Just causes for termination: Article 297 (formerly Art. 282)
- Authorized causes (redundancy, retrenchment, closure, labor-saving devices): Article 298 (formerly Art. 283)
- Disease as a ground: Article 299 (formerly Art. 284)
- Security of tenure / illegal dismissal consequences: Article 294 (formerly Art. 279)

B. Contracting/subcontracting rules

If the worker was “contractual” because they were supplied by a contractor/agency, the DOLE rules on contracting (notably Department Order No. 174, Series of 2017) become central, especially in distinguishing:

Legitimate job contracting (contractor is the employer); versus
Labor-only contracting (principal is deemed the employer).

That single distinction can move the “date hired” years earlier (principal-as-employer from the start) or reset it later (principal employs only upon direct hiring).

C. Final pay guidance

DOLE has issued policy guidance (commonly referenced in practice) that final pay is expected to be released within a reasonable period (often framed as 30 days from separation, unless a more favorable company policy/CBA applies) and that a Certificate of Employment must be issued within a short period upon request. These are practical standards frequently invoked in labor disputes and compliance audits.

III. Clarifying Terms: “Contractual” Is Not a Legal Employment Status

“Contractual” is used in everyday HR language, but Philippine labor law does not recognize “contractual” as a standalone category that automatically defeats regularization or resets “date hired.” The law recognizes types of employment, each with its own rules:

Regular employment (by nature of work: “necessary or desirable,” or by length/service for casuals)
Probationary employment (trial period, typically up to 6 months, with standards)
Project employment (employment for a specific project, with determinable completion)
Seasonal employment (work for seasons; may become regular seasonal)
Fixed-term employment (permitted under strict conditions; not for circumvention)
Casual employment (not usually necessary/desirable; can become regular after 1 year for the activity)
Independent contracting/consultancy (no employer–employee relationship if truly independent)
Contracting/subcontracting arrangements (worker may be employed by contractor or principal depending on legality)

So the key is never the label. It is the legal nature of the engagement.

IV. The Core Rule: “Date Hired” Usually Means the First Day of Employment—Not the Date of Regularization

A. Regularization does not create a new employment relationship

When a worker is already an employee (even if probationary or misclassified as “contractual”), “regularization” generally means the worker is now a regular employee—but their employment began earlier.

In disputes about separation pay and final pay computations, the legally relevant date is usually:

the first day the employee actually started working and was treated as an employee (paid wages/salary, subject to employer control, etc.), provided the relationship is continuous or legally treated as continuous.

B. The practical effect

Years of service for separation pay are typically counted from the start of employment, including:
- probationary period,
- initial fixed-term(s) if later found to be a scheme to avoid regularization,
- repeated “5-5” contracts if continuity and job nature support regular status,
- periods where the worker was effectively an employee under the four-fold/control test.

But there are exceptions—especially in agency/contractor scenarios and genuine breaks in service.

V. Step One: Identify the Real Employer and When the Employer–Employee Relationship Started

Before computing “date hired,” resolve: who employed the worker during the earlier period?

A. The four-fold test (and the control test)

Philippine jurisprudence commonly uses the four-fold test to establish employment:

Selection and engagement
Payment of wages
Power of dismissal
Power of control (most important)

If the “contractual” worker was controlled as to means and methods (not just results), that points strongly to employment.

B. Contractor/agency supplied workers: legitimate contracting vs labor-only contracting

If a worker was supplied by a manpower agency or contractor:

Under legitimate job contracting, the contractor is the employer. If the principal later directly hires the worker, the principal’s “date hired” commonly begins on the direct hire date—unless there’s an agreement recognizing prior service.
Under labor-only contracting (prohibited), the principal is deemed the employer from the beginning. In that case, the “date hired” for claims against the principal can trace back to the worker’s first day assigned and working under principal control.

This distinction is frequently outcome-determinative for separation pay computations.

VI. Separation Pay: When It’s Due and How “Date Hired” Controls the Amount

A. Separation pay is not automatic

In Philippine law, separation pay is generally due when:

Employment is terminated for authorized causes under Article 298 (formerly 283):
- installation of labor-saving devices
- redundancy
- retrenchment to prevent losses
- closure/cessation of business (not due to serious losses)
Employment is terminated due to disease under Article 299 (formerly 284).
A CBA, company policy, or employment contract grants separation pay on other grounds (including resignation, end-of-contract, etc.).
Courts/tribunals award separation pay in lieu of reinstatement (common in illegal dismissal outcomes), or grant financial assistance in exceptional equitable situations (not guaranteed and highly fact-dependent).

B. Statutory formulas (authorized causes and disease)

Under the Labor Code:

Labor-saving devices or redundancy:
- at least one (1) month pay OR one (1) month pay per year of service, whichever is higher.
Retrenchment to prevent losses or closure/cessation not due to serious losses:
- at least one (1) month pay OR one-half (1/2) month pay per year of service, whichever is higher.
Disease (where continued employment is prohibited or prejudicial):
- at least one (1) month pay OR one-half (1/2) month pay per year of service, whichever is higher.

C. Rounding rule: the “fraction of at least six months” principle

For statutory separation pay computations, a common rule applied is:

A fraction of at least six (6) months is treated as one (1) whole year for purposes of computing separation pay.

This makes “date hired” and “date of termination” critical, because moving the start date can push the total service over a 6-month fraction and increase the multiplier.

D. What counts as “one month pay”?

For separation pay, “month pay” is typically based on the employee’s salary rate and includes components that are integrated into the wage (e.g., certain regular allowances that are part of wage). It generally excludes purely contingent or reimbursement-type items. Because pay structures vary, disputes often arise over whether certain allowances should be included.

E. “Date hired” for separation pay is usually the start of employment with the employer liable for separation pay

So if a worker:

started as “contractual” but was in truth a probationary/regular employee from day one, or
performed work necessary/desirable in the business continuously despite repeated short contracts,

then the legally correct “date hired” for separation pay computations is commonly the first day they were engaged and began work, not the date of regularization.

VII. Final Pay: What It Includes, and Where “Date Hired” Matters

“Final pay” is the umbrella settlement of all unpaid amounts due at separation, typically including:

Unpaid salary/wages up to last day worked
Pro-rated 13th month pay (if applicable)
Cash conversion of unused leave credits, if convertible by law/policy/practice
Separation pay, if due (statute/CBA/policy/award)
Retirement pay, if applicable (R.A. 7641 or plan)
Refunds (e.g., excess tax withholding, if any)
Other benefits promised by contract/CBA/company policy
Less lawful deductions (tax, agreed obligations, proven debts, etc.)

Where “date hired” affects final pay:

Service Incentive Leave (SIL): Statutory SIL of 5 days per year generally applies after one year of service, subject to exemptions. If someone is treated as “newly hired” only upon regularization, SIL accrual may be wrongly delayed.
Leave conversions: If company policy grants leave credits based on tenure tiers (e.g., +1 day per year after year 3), tenure counting becomes a “date hired” issue.
Separation pay included in final pay: “date hired” affects years-of-service multiplier.
Retirement eligibility and computation: tenure is central.
Pro-rated benefits tied to employment duration (not merely earnings-based).

Where “date hired” matters less (but still can be disputed):

13th month pay is based on basic salary earned within the calendar year; it is generally prorated if employment ended mid-year. The start date matters mainly to determine the covered period and to avoid missing early-month earnings.

VIII. Common Scenarios and the Correct “Date Hired” Approach

Scenario 1: Direct hire → “contractual” label → regularization after 6 months

Pattern: Employee signs a series of short contracts (often 5 months), but is directly supervised by the company, doing core work.

Typical legal treatment: If facts show the worker was an employee from the beginning and the work is necessary/desirable, the person may be deemed regular by operation of law (immediately or after legal thresholds), and the “date hired” for service-based computations is commonly the first day of actual work.

Takeaway: Regularization letter date is evidence of status change, not the start of employment.

Scenario 2: Probationary employment → regular employee

Pattern: Employee starts on probationary status, continues beyond probation, later receives regularization notice.

Typical legal treatment: Probationary service counts toward tenure. “Date hired” is the first day of probationary employment.

Scenario 3: Repeated fixed-term contracts (“endo” / “5-5”) for the same role

Pattern: Five-month contracts repeatedly renewed to avoid regular status.

Typical legal treatment: If fixed-term is used to defeat security of tenure, tribunals may disregard the form and treat the employee as regular, counting tenure from the initial engagement. A genuinely valid fixed-term arrangement exists only under strict jurisprudential conditions and not as a routine device for regular jobs.

Separation pay implication: If separation pay becomes due (authorized cause, illegal dismissal award, policy), the length-of-service base commonly traces back to the earliest period treated as employment.

Scenario 4: Project employment that is truly project-based

Pattern: Employment tied to a specific project with clear scope and completion; engagement ends upon project completion.

Typical legal treatment: If genuinely project employment, “date hired” is tied to the project engagement, and completion is not typically “termination” requiring statutory separation pay (though final pay is still due). Repeated project engagements can still raise regularization issues if the work and hiring pattern show regular necessity and continuity beyond legitimate project parameters.

Scenario 5: Seasonal employment that repeats annually

Pattern: Worker hired during a season year after year.

Typical legal treatment: Seasonal workers can become regular seasonal. Tenure may be recognized from the first season, with employment deemed to continue in a recurring seasonal sense. Service counting depends on the benefit and legal characterization; disputes often focus on whether off-season gaps are genuine breaks or inherent to seasonal employment.

Scenario 6: Agency worker later absorbed by the principal

Pattern: Worker is employed by an agency/contractor, assigned to a principal, later principal “absorbs” them as direct hire.

Two possible legal outcomes:

Legitimate job contracting:
- Employer during the earlier period is the contractor/agency.
- Principal’s “date hired” ordinarily starts at absorption/direct hire.
Labor-only contracting:
- Principal may be deemed the employer from the beginning.
- “Date hired” against the principal can be the first day of deployment (earliest service).

Practical note: Even if contracting is legitimate, some principals voluntarily credit prior service for tenure-based perks. That is a policy choice unless required by agreement or special circumstances.

Scenario 7: “Resigned then rehired” or “end of contract then rehired” with breaks

Pattern: Employee is separated (resignation, end-of-contract) then rehired after a gap.

General rule: A real, voluntary, and properly documented separation can reset the “date hired” for the new employment stint.

Exception: If the “break” is found to be a sham designed to defeat regularization or benefits—e.g., forced resignations, artificial gaps, repeated rehirings for the same job under control—adjudicators may treat service as effectively continuous for security of tenure and benefit computations.

IX. “Date Hired” for Separation Pay: Special Situations

A. Separation pay in lieu of reinstatement (illegal dismissal outcomes)

Where illegal dismissal is found, reinstatement is the primary remedy. If reinstatement is no longer feasible (strained relations, closure, position abolition, etc.), tribunals may award separation pay in lieu of reinstatement.

A frequently applied approach is that the separation pay base counts from date of hiring up to finality of the decision (or another adjudicated cutoff), rather than merely up to the date of dismissal. This can substantially increase the award.

B. Separation pay as “financial assistance” in just-cause dismissals

Sometimes, separation pay (or financial assistance) is granted on equitable grounds even where dismissal is for just cause, but this is not a right and is often denied in serious misconduct, fraud, moral turpitude, or similarly grave cases. When granted, tenure counting generally begins from the true start of employment.

X. Evidence That Proves the Correct “Date Hired”

Because many disputes are factual, documentation matters. Useful evidence includes:

Employment contracts and renewals (even if short-term)
Payslips, payroll records, time records
Company IDs, emails, work assignments, memos
Performance evaluations, regularization letters
SSS/PhilHealth/Pag-IBIG remittance histories
Org charts, schedules, supervisor instructions
DOLE filings and termination notices (for authorized causes)
Proof of continuous service despite “gaps” (e.g., attendance, gate logs, system access)

A common litigation dynamic:

Employer argues “date hired” = date of regularization/latest contract.
Employee argues “date hired” = first engagement.
The outcome depends on whether the earlier period is legally recognized as employment with the liable employer and whether continuity is established.

XI. Compliance Pitfalls and How Disputes Commonly Arise

A. Using “regularization date” as “date hired” for all benefits

This often triggers claims of:

underpayment of separation pay (authorized cause or award),
delayed SIL accrual,
incorrect tenure-based leave tiers,
diminished benefits (which can implicate non-diminution principles where benefits have ripened into practice).

B. Treating “end of contract” as a lawful dismissal of a regular employee

If the worker is deemed regular, “end of contract” is not a lawful termination ground. The case may become an illegal dismissal dispute with backwages and/or separation pay in lieu of reinstatement.

C. Contractor arrangements used to mask principal employment

If labor-only contracting is found, the principal may face:

direct employer liability,
backwages/benefits differentials,
recalculation of tenure from the earliest service date.

XII. Money Claims Timing: Prescription Overview

Common prescription rules invoked in practice:

Money claims arising from employer–employee relations are commonly subject to a three (3)-year prescriptive period under the Labor Code for many types of claims.
Illegal dismissal actions have been treated as prescribing in four (4) years (often anchored on Civil Code principles), though accompanying money claims can have different treatment depending on characterization.

Because classification and remedy affect prescription analysis, timing issues can be decisive in date-hired disputes.

XIII. Practical Computation Illustrations (Simplified)

Example 1: Redundancy with disputed “date hired”

First day worked: January 10, 2020
Regularization letter: July 10, 2020
Termination by redundancy: February 9, 2026
Monthly salary: ₱30,000

If counted from Jan 10, 2020 → Feb 9, 2026: about 6 years and 1 month → 6 years for statutory separation pay (fraction < 6 months). Separation pay (redundancy): 1 month per year → 6 × ₱30,000 = ₱180,000.

If counted only from July 10, 2020 → Feb 9, 2026: about 5 years and 7 months → often rounded to 6 years (fraction ≥ 6 months). Here the amount may coincidentally match, but in many cases (especially near the 6-month threshold) it does not.

Example 2: Retrenchment with threshold effect

If service is 4 years and 5 months vs 4 years and 7 months, the rounding rule can shift the multiplier from 4 to 5, changing separation pay materially.

XIV. Bottom Line Rules (Philippine Context)

Regularization is generally not the start of employment; it is a change in status.
The legally relevant “date hired” for separation pay and tenure-based final pay components is usually the first day of actual employment with the employer liable for the benefit—not the date of regularization or the latest short-term contract.
The result can change if the worker’s earlier service was:
- with a different employer (legitimate contractor/agency), or
- separated by a genuine break in service, or
- governed by a truly valid project/fixed-term arrangement not used to defeat tenure rights.
For agency/contractor deployments, the single biggest determinant is whether the arrangement is legitimate job contracting or labor-only contracting—because that determines who the real employer is and therefore whose “date hired” counts.
Final pay is broader than separation pay and often includes statutory prorations and conversions where tenure (and thus “date hired”) directly affects entitlement and amounts.