Fixed-Term Employment Should Be Backed Up by a Written Contract

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Fixed-term employment is valid under both the Civil Code and the Labor Code.

Article 295 of the Labor code categorizes employees into regular, project, seasonal, and casual. It further classifieds regular employees into two kinds: (1) those engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer; and (2) casual employees who have rendered at least one year of service, whether such service is continuous or broken.

In 1990, Brent vs. Zamora was decided by the Supreme Court (SC) which recognized another classification of employment: fixed-term employment. In Brent, the Civil Code and the Labor Code allow the execution of fixed-term employment contracts. But when periods have been imposed to prevent an employee from acquiring his or her security of tenure, the contract effectively runs counter to public policy and morals, and must, therefore, be disregarded.

In drawing the line, Brent laid down the criteria under which a fixed-term employment cannot be deemed in circumvention of the security of tenure:

(1) When the parties have knowingly and voluntarily agreed upon a fixed period of employment without any force, duress, or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent;

(2) When it satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with the employer not having exercised any moral dominance over the employee.

The SC held in the case of Claret School of Quezon City vs. Sinday (G.R. No. 226358, October 9, 2019), that the ruling in Brent is the exception rather than the rule, and a fixed-term employment is recognized as valid only under certain circumstances, particularly when a fixed-term is an essential and natural appurtenance.

Further, in determining the validity of a fixed-term employment, the level of protection accorded to labor is ascertained based on the nature of the work, qualifications of the employee and other relevant circumstances. Hence, the criteria limit the application of Brent to particular cases where the employer and the employee are on a more or less equal footing in entering into the contract. If none of the aforementioned criteria are present, the Court will strike down a fixed-term employment contract.

In the Claret case, the school failed to produce the written contract of fixed-term employment. Thus, the SC held that the absence of a contract evidencing the fixed-term employment militates against Claret’s claims. The decisive determinant in fixed-term employment is the day certain agreed upon by the parties for the commencement and termination of their employment relationship. Here, there was no day certain agreed upon by the parties.

Read the full digest of the Claret case here.

The importance of having an employment contract cannot be overemphasized considering that this lays down the exact relationship of the parties if properly crafted. Any ambiguity in the employment arrangement will be resolved in favor of labor. As in any employment classification, regular employment is the best situation for the worker.

Avoid technical errors in crafting employment agreements. See here the sample employment templates, most especially fixed-term employment contract in editable Word file.

Below is a sample template of fixed-term employment contract:

CONTRACT FOR FIXED-TERM EMPLOYMENT

KNOW ALL MEN BY THESE PRESENTS:

This CONTRACT FOR FIXED-TERM EMPLOYMENT is entered into by and between:

XYZ CORPORATION, a corporation duly organized and existing under and by virtue of the laws of the Republic of the Philippines and with principal place of business at 1234 D. Majanaf St., Cacaligao Village, Makati City, herein represented by its HR Manager, ___________________________, and hereinafter referred to as the “EMPLOYER”;

-and-

1. XXX, of legal age, married/single, with residential address at ___________________________________, and hereinafter referred to as “FIXED TERM WORKER”;

WITNESSETH THAT:

WHEREAS, the EMPLOYER accepts the offer of the FIXED TERM WORKER to be employed with a fixed term or duration;

WHEREAS, the FIXED TERM WORKER seeks employment, applied for and knowingly and voluntarily agreed to work on fixed term with specific duration;

THEREFORE, the parties hereby covenant:

COMMENCEMENT OF FIXED-TERM EMPLOYMENT

1. The FIXED TERM WORKER is engaged as a Trainee II with duties and responsibilities set forth hereunder subject to provisions on duration or term of engagement and other lawful causes for termination of relationship under the law;
2. The FIXED TERM WORKER shall report for work on or before 8:30 a.m. and leave not earlier than 5:30 p.m., Monday to Saturday;
3. The FIXED TERM WORKER, pursuant to this fixed term employment, knowingly and voluntarily agreed to sign the same and shall serve for one (1) year commencing ______________ until _______________ and after which the contract shall be deemed automatically expired. There was no moral dominance by the EMPLOYER over the FIXED TERM WORKER;

JUST AND AUTHORIZED CAUSES FOR DISMISSAL OR TERMINATION

4. The FIXED TERM WORKER may be dismissed from service for just causes found under Article 297 of the Labor Code, as amended and other applicable provisions of the Labor Code, in addition to expiration of the service as hereunder set forth;
5. The employment may likewise be terminated for authorized cause under Articles 298 and Article 299 of the Labor Code, as amended;
6. Further, the employment may be terminated in the event of violation by the FIXED TERM WORKER of the provisions of the Code of Conduct contained in the HR Manual hereto attached as Annex “A”. The FIXED TERM WORKER undertakes that he has read and understood the provisions therein and were fully explained to his in language and/or dialect that he understands and agrees to abide thereto;
7. Employment may likewise be validly terminated if the business operation has ceased on account of a law, rules or regulations ordering the cessation of the company;
8. The employment may likewise be suspended due to causes arising from lack of raw materials, lack of customer order, declining sales, among others as determined by the management;

PLACE OF POSTING

9. The initial place of posting of the FIXED TERM WORKER shall be in the principal office of the EMPLOYER. However, the FIXED TERM WORKER agrees to be assigned anywhere in the Philippines when the exigencies of business require;
10. The place of work may change when the EMPLOYER moves to another principal place of business and in such case, the FIXED TERM WORKER agrees to relocate;

DUTIES AND RESPONSIBILITIES

11. The FIXED TERM WORKER shall perform duties and responsibilities hereto attached as Annex “B,” and such other responsibilities that may be assigned relevant thereto;
12. In addition, the FIXED TERM WORKER shall observe the law, rules and regulations, standards of fairness, justice, good customs and fair play in the discharge of his duties;

COMPENSATION AND BENEFITS

13. The FIXED-TERM WORKER shall receive a salary of _______________________ PESOS (PHP____________.00) per day which will be paid every 15^th and 30^th or 31^st, as the case may be, of each month subject to the following payroll cut-off period;
14. For the payroll period of 15^th of the month, attendance cut-off shall be until the 5^th of said month. While for the payroll period of 30^th of the month, the cut-off shall be from the 6^th of the month until 20^th thereof;
15. The salary of the FIXED-TERM WORKER shall be deducted an amount representing her taxes, contribution to social legislation benefits such as SSS, Pag-Ibig and Philhealth. He is likewise entitled to 13^th month pay provided she has served at least one (1) month of service;
16. The FIXED-TERM WORKER undertakes to treat with strict confidentiality her compensation and benefits information and all other employment records. She shall refrain from discussing with anyone whether connected with the EMPLOYER or not. Violation of this prohibition shall be considered as ground for disciplinary action and shall affect the behavior rating stated above;
17. The salary of the FIXED TERM WORKER shall be deducted an amount representing his contribution to social legislation benefits such as Social Security Systems (SSS), Pag-Ibig and Philhealth. He is likewise entitled to 13th month pay provided he has served at least one (1) month of service;
18. The FIXED TERM WORKER shall hold in strict confidence all information that he may have obtained by reason of his employment and shall not divulge or disclose the same to anyone without prior written permission from the EMPLOYER;
19. The FIXED TERM WORKER shall not engage in or get employed with any company, person or individual whose business competes with that of the EMPLOYER within two (2) years after the expiration of this agreement;
20. During his employment, the FIXED TERM WORKER shall not engage in any employment, whether part-time or full-time, or in any capacity with other entities or companies while this agreement is in force and effect, without prejudice to paragraph 17 hereof;
21. The compensation and benefits are customized for each employee. Thus, the FIXED TERM WORKER undertakes to treat with strict confidentiality his compensation and benefits information. He shall refrain from discussing with anyone whether connected with the EMPLOYER or not. Violation of this prohibition shall be considered as ground for disciplinary action;
22. This written contract and its annexes constitute the entire agreement between the parties binding between them and their assigns, heirs and successors-in-interest;
23. The FIXED TERM WORKER undertakes that he executed this agreement on his own volition, freely and without any force or intimidation. He knowingly and voluntarily agreed to the execution and signing thereof and no force, duress or improper pressure was placed upon him. The contents and terms of this engagement were explained in Filipino to him which he fully understood and agreed upon;
24. The FIXED TERM WORKER acknowledges that he had the option of not accepting this contract and had the freedom not to sign or to walk away if he finds any provision disagreeable. He acknowledges that with such option, both parties are on equal terms and that the EMPLOYER did not exert any moral dominance over him.

CONSENT UNDER DATA PRIVACY LAW

25. By providing personal information and sensitive personal information, the employee acknowledges and recognizes the exclusive right of the company to utilize the data for employment purposes and for other relevant or incidental uses. The employee also acknowledges that all such additional information, records, files, among others, shall form part of the exclusive use of the company and he consents to the use thereof. These acts of the company are not and shall not be deemed as violation of data privacy law, human relations, or any breach of personal information or sensitive personal information. Consent hereof is likewise given when subsequent data and information are shared in the event of personnel movement, such as lateral transfer, promotion, change of status, etc. He renders the company, its officers, directors, stockholders, employees, agents, and representatives free and harmless from any and all liabilities arising from the use of said data, records, or information.

IN WITNESS WHEREOF, the parties have hereby affixed their respective signature this ____ day of _______, 20___, in the City of ____________.

For the EMPLOYER:

__________________                                                        _____________________
President                                                                               FIXED TERM WORKER

Signed in the presence of:

__________________________                          _________________________

ACKNOWLEDGMENT

Republic of the Philippines )

City of _______________  ) S.S.

BEFORE ME, a notary public for and in the City of ______________, the parties appeared and presented their respective identification cards as competent proof of identity and are known to me and to me known to be the same persons who executed the foregoing Contract for Fixed Term Employment consisting of four (4) pages, including this page where the Acknowledgment is written and affirmed to me that the same is their own, free, voluntary act and deed.

WITNESS MY HAND AND SEAL, this _____ day of __________, 20____.

Doc. No.: _________;
Page No.: _________;
Book No.: _________;
Series of 20___