When “Off-Detail” Means Illegal Dismissal: Know Your Rights as a Security Guard

TLDR: Being placed on “floating status” isn’t always a temporary inconvenience for security guards in the Philippines. This Supreme Court case clarifies that if a security agency doesn’t have a valid reason for off-detailing guards, especially when new guards are hired instead, it can be considered illegal dismissal, entitling the guards to separation pay and back wages. Clients can also be held jointly liable for certain labor standards benefits.

G.R. NO. 122468 & 122716. SEPTEMBER 3, 1998

INTRODUCTION

Imagine being a security guard faithfully serving at your post for years, only to be suddenly told you’re being replaced because you’re “too old.” This was the harsh reality faced by several security guards in Cebu, sparking a legal battle that reached the Philippine Supreme Court. This case, Sentinel Security Agency, Inc. vs. National Labor Relations Commission, delves into the critical distinction between a legitimate “floating status” for security guards and illegal dismissal disguised as reassignment. It underscores the importance of job security and fair labor practices, even in industries where employment can seem precarious. The Supreme Court’s decision offers crucial insights for both security agencies and their employees, clarifying the boundaries of permissible employee transfers and the liabilities of clients.

LEGAL CONTEXT: FLOATING STATUS, ILLEGAL DISMISSAL, AND SOLIDARY LIABILITY

In the security industry, the term “floating status” is commonly used. It refers to the situation where a security guard is temporarily off-duty, awaiting reassignment to a new post. This is often seen as an inherent aspect of the job, as assignments depend on contracts between security agencies and their clients. However, Philippine labor law provides safeguards against the abuse of this practice. The Labor Code protects employees from illegal dismissal, which can take many forms, including “constructive dismissal.”

Constructive dismissal occurs when an employer makes continued employment unbearable, forcing the employee to resign. In the context of security guards, indefinite or unreasonable “floating status,” especially when coupled with actions suggesting termination, can be deemed constructive dismissal.

Article 287 of the Labor Code, as amended by Republic Act 7641 (the Retirement Pay Law), is also relevant, outlining retirement benefits for employees. Furthermore, Articles 106, 107, and 109 of the Labor Code address contracting and subcontracting, particularly in industries like security services. These articles establish the principle of solidary liability, meaning that both the direct employer (the security agency) and the indirect employer (the client) can be held responsible for certain labor obligations to the employees.

Specifically, Article 106 states:

“ART. 106. Contractor or subcontractor. – Whenever an employer enters into a contract with another person for the performance of the former[‘s] work, the employees of the contractor and of the latter[‘s] subcontractor, if any, shall be paid in accordance with the provisions of this Code.

In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him.”

Previous Supreme Court cases like Superstar Security Agency, Inc. vs. NLRC and A’ Prime Security Services, Inc. vs. NLRC acknowledged the concept of “floating status.” However, these cases also emphasized that such status must be temporary and justified by legitimate business reasons, such as a temporary lull in contracts or employee misconduct. The case of Rosewood Processing, Inc. vs. NLRC further clarified the solidary liability of clients for certain labor standards benefits of security guards provided by agencies.

CASE BREAKDOWN: THE GUARDS’ RELIEF AND THE LEGAL BATTLE

The case began when several long-serving security guards – Adriano Cabano, Jr., Veronico C. Zambo, Helcias Arroyo, Rustico Andoy, and Maximo Ortiz – employed by Sentinel Security Agency, Inc. and assigned to Philippine American Life Insurance Company (Philamlife) in Cebu City, were abruptly relieved from their posts.

• December 16, 1993: Philamlife informed Sentinel Security Agency of the renewal of their security services contract but requested the replacement of all security guards in their Cebu offices.
• January 12, 1994: Sentinel issued a “Relief and Transfer Order,” effectively removing the five guards from their Philamlife posts, effective January 16, 1994.
• January 16, 1994: The guards reported to Sentinel for reassignment as ordered but were allegedly told they were being replaced because they were “already old.” They were not given new assignments.
• January-February 1994: The guards promptly filed illegal dismissal cases with the National Labor Relations Commission (NLRC), seeking separation pay and other benefits.

The Labor Arbiter initially ruled in favor of the guards, ordering Sentinel and Philamlife to pay 13th-month pay and service incentive leave. On appeal, the NLRC modified the decision, excluding the 13th-month pay (as it was shown to have been paid) but adding separation pay and back wages, finding the guards were constructively dismissed. The NLRC reasoned that removing long-term guards without a valid reason, especially with the remark about their age, was a scheme to mask illegal dismissal.

The case reached the Supreme Court via petitions for certiorari from both Sentinel Security Agency and Philamlife. Sentinel argued there was no illegal dismissal, claiming the guards were merely placed on “floating status” and had prematurely filed their complaints. Philamlife denied employer-employee relationship and liability.

The Supreme Court sided with the NLRC’s finding of illegal dismissal, albeit with slightly different reasoning. Justice Panganiban, writing for the Court, stated:

“We agree that the security guards were illegally dismissed, but not for the reasons given by the public respondent. The aforecited contentions of the NLRC are speculative and unsupported by the evidence on record…”

The Court clarified that while “floating status” is a recognized concept, it cannot be indefinite or used as a pretext for dismissal. The Court emphasized that a legitimate transfer involves:

“A transfer means a movement (1) from one position to another of equivalent rank, level or salary, without a break in the service; and (2) from one office to another within the same business establishment.”

In this case, the Court found that Sentinel did not genuinely intend to transfer the guards. Instead, they hired new guards to replace the complainants, demonstrating a clear intention to terminate their employment without just cause. The Court highlighted:

“However, this legally recognized concept of transfer was not implemented. The agency hired new security guards to replace the complainants, resulting in a lack of posts to which the complainants could have been reassigned. Thus, it refused to reassign Complainant Andoy when he reported for duty…and merely told the other complainants…that they were already too old to be posted anywhere.”

The Supreme Court affirmed the NLRC’s decision but clarified Philamlife’s liability. While Philamlife was not liable for back wages and separation pay (as it was not the direct employer responsible for the illegal dismissal), it was held jointly and severally liable with Sentinel for the guards’ service incentive leave pay, based on the principle of solidary liability under Articles 106, 107, and 109 of the Labor Code.

PRACTICAL IMPLICATIONS: WHAT THIS CASE MEANS FOR SECURITY AGENCIES AND CLIENTS

This case provides critical guidance for security agencies and their clients in the Philippines:

• Legitimate Floating Status: Placing security guards on “floating status” is acceptable only for a reasonable period (generally considered up to six months) and must be due to bona fide reasons, such as a temporary suspension of operations or a genuine lack of available posts. It cannot be used as a way to circumvent labor laws or dismiss employees without just cause.
• Transfers Must Be Genuine: Transfers of security guards must be real reassignments to other posts, not simply a prelude to termination. Hiring new employees to fill the posts of “transferred” guards undermines the legitimacy of the transfer.
• Age Discrimination is Unacceptable: Replacing guards solely based on age, as implied in this case, is likely discriminatory and illegal. Labor laws protect employees from age-based discrimination.
• Client Liability: Clients of security agencies are not immune to labor obligations. They can be held jointly and severally liable with the agency for unpaid wages and certain benefits like service incentive leave, especially during the period the guards served at their premises. Clients should ensure their security agencies comply with labor laws to avoid potential liabilities.

Key Lessons:

• For Security Agencies: Ensure “floating status” is genuinely temporary and justified. Document legitimate reasons for off-detailing and actively seek reassignment opportunities for guards. Avoid discriminatory practices, especially age-based replacements.
• For Security Guards: Understand your rights regarding “floating status.” If you are placed on off-detail without a clear reason or for an extended period, especially if new guards are hired, it could be constructive dismissal. Seek legal advice promptly.
• For Clients: Choose reputable security agencies known for fair labor practices. Understand your potential solidary liability for the wages and benefits of security guards deployed at your premises. Include provisions in your security service contracts ensuring labor law compliance.

FREQUENTLY ASKED QUESTIONS (FAQs)

Q: What is “floating status” for security guards?

A: “Floating status” is when a security guard is temporarily off-duty, waiting for a new assignment. It’s a common practice in the security industry due to the contract-based nature of the work.

Q: Is it legal for a security agency to place guards on floating status?

A: Yes, it can be legal if it’s temporary and for valid reasons like lack of client contracts or temporary suspension of operations. However, it cannot be indefinite or used to circumvent labor laws.

Q: When does “floating status” become illegal dismissal?

A: If floating status is prolonged unreasonably, without genuine efforts for reassignment, or used as a pretext to terminate employment (especially when new guards are hired instead), it can be considered constructive illegal dismissal.

Q: Can I file an illegal dismissal case if I’m on floating status?

A: Yes, if you believe your floating status is unreasonable or a disguised dismissal, you can file a case with the NLRC. Prompt action is advisable.

Q: What compensation am I entitled to if illegally dismissed?

A: If found illegally dismissed, you are typically entitled to back wages (unpaid salary from dismissal to reinstatement) and separation pay (usually one month’s salary for each year of service, or half-month if due to redundancy). Reinstatement may also be ordered unless strained relations make it impractical, in which case, additional separation pay may be awarded.

Q: Is the client of the security agency liable if the agency illegally dismisses guards?

A: Not directly for illegal dismissal compensation (like back wages and separation pay). However, clients can be held jointly and severally liable with the agency for unpaid wages and certain benefits like service incentive leave during the time guards were assigned to them.

Q: What should security agencies do to avoid illegal dismissal claims?

A: Maintain clear documentation for floating status, ensure it’s temporary and for valid reasons, actively seek reassignments, and avoid actions that suggest termination (like hiring replacements). Treat employees fairly and comply with all labor laws.

Q: What should clients do to protect themselves from liability?

A: Choose reputable agencies, include labor law compliance clauses in contracts, and ensure timely payment to agencies to facilitate timely wage payments to guards.

ASG Law specializes in Labor Law and Employment Disputes. Contact us or email hello@asglawpartners.com to schedule a consultation.