OFW Illegally Dismissed: Salary for the Unexpired Contract

The rule is in Section 10 of Republic Act No. 8042, the Migrant Workers and Overseas Filipinos Act of 1995, as amended by Republic Act No. 10022 in 2010. The Supreme Court quoted the amended section in Aldovino v. Gold and Green Manpower (2019). In simple words, it says:

• If overseas employment is ended without just, valid or authorized cause, or the worker's salary has unauthorized deductions, the worker gets full reimbursement of the placement fee and the deductions with interest at 12% per year (as quoted in 2019; later changes were not checked), plus salaries for the unexpired portion of the contract.
• The text then adds "or for three (3) months for every year of the unexpired term, whichever is less". That clause is now void (see below).
• The Labor Arbiters of the National Labor Relations Commission (NLRC) have original and exclusive jurisdiction over claims of workers deployed overseas, including claims for damages.
• The liability of the foreign principal or employer and the recruitment or placement agency is joint and several, and if the agency is a company, its corporate officers and directors are also liable with it.

We read this section only as quoted in the Supreme Court decisions. We did not read Republic Act No. 8042 as further amended after 2010, or Republic Act No. 11641, the law on the Department of Migrant Workers (DMW). Check the current text before relying on any detail beyond what the Court ruled.

Serrano v. Gallant Maritime Services (2009). A seafarer had nine months and 23 days left on his contract when he was illegally dismissed. Applying the clause, the lower tribunals gave him only three months of salary. The Supreme Court declared the clause "or for three months for every year of the unexpired term, whichever is less" unconstitutional and awarded him his salaries for the entire unexpired period.

Republic Act No. 10022 (2010). In 2010, Congress amended Section 10 and kept the same clause in Section 7 of the new law.

Sameer Overseas Placement Agency v. Cabiles (2014). The Court struck down the clause again. It said: "A law or provision of law that was already declared unconstitutional remains as such unless circumstances have so changed as to warrant a reverse conclusion." The clause in Section 7 of Republic Act No. 10022 was declared unconstitutional and "null and void". See the case explainer Sameer Overseas Placement Agency v. Cabiles.

Aldovino (2019). The Court applied Sameer again to factory workers in Taiwan and awarded their salaries for the actual unexpired portion of their contracts.

Joy Cabiles signed a one-year contract for a quality control job in Taiwan. She was deployed on June 26, 1997, and was told on July 14, 1997, less than three weeks later, that she was terminated. She was sent home the same day. Her employer claimed she was inefficient, but the Court found no evidence of it, and no notice or hearing before her dismissal. Without proof of a just cause, the dismissal was illegal. Since her contract ran for a year, it held that she was entitled to her salary from July 15, 1997 to June 25, 1998, the whole unexpired period, not just three months. The salary award earns 6% interest per year from the finality of the judgment.

In Sameer (2014), the Court applied 12% per year. It explained that the 6% legal interest rate set by the Bangko Sentral ng Pilipinas does not change the 12% rate fixed by law for placement fee refunds, because "Bangko Sentral ng Pilipinas circulars cannot repeal Republic Act No. 8042". In Aldovino, the Court ordered the refund of the workers' placement fees with 12% interest, and 6% interest on the rest of the money award from finality until paid.

We could not confirm on an official text whether later laws changed these rates. Ask the DMW or the NLRC for the current rules.

Yes, depending on the facts. In Aldovino, the workers were verbally dismissed without notice and without a valid cause. The Court awarded, for each worker, moral damages of ₱50,000, exemplary damages of ₱25,000 and attorney's fees of 10% of the award. These amounts were set for that case. See Illegally dismissed: what can you get?

The Aldovino workers had also signed a compromise agreement in Taiwan right after they were let go. The Court said it did not bar their case, because it was meant only to settle unpaid salaries and overtime, and they signed it "out of dire necessity". It added that blanket waivers freeing employers from liability on their employees' claims are ineffective.

These are made-up examples to show how the rules work. They are not advice for any real case.

Marites signs a two-year contract as a caregiver abroad. After eight months, her employer sends her home without any valid reason. If the Labor Arbiter finds she was illegally dismissed, she can claim her salary for the remaining 16 months, not just three months of pay for each year left, plus a refund of her placement fee. In Sameer and Aldovino, the Court ordered such refunds with 12% interest; whether that rate still applies today was not checked.

Ramon, a seafarer, has five months left on his contract when he is let go without a valid cause. If the dismissal is found illegal, under Serrano and Sameer he can claim the salary for all five months, not a capped amount.

Ella is told to sign a "settlement" at the employer's office abroad on the day she is fired, accepting only her unpaid wages and giving up all other claims. Under Aldovino, a paper signed out of necessity that covers only unpaid wages may not stop her from filing an illegal dismissal case at home.

• Keep your contract, payslips, messages and any termination letter or "settlement".
• Check the status of your recruitment agency on the DMW list: see how to check an agency and the DMW agency list.
• Ask the DMW or the NLRC where and how to file, and by when.

OFW cases involve contracts, foreign employers, agencies and large amounts, so talk to a lawyer before signing any settlement or filing a case. If you cannot afford a lawyer, see Free legal help in the Philippines for the Public Attorney's Office (PAO) and other options.