FORMS OF EMPLOYMENT IN THE PHILIPPINES

Forms of employment can be categorized into three:

1. Regular
2. Temporary
3. Third Party

Please note that some terms used herein are coined by the author based on professional experience.

Regular employment refers to those which are:

1. Intended to be regular by employers which may occur:
   • Upon hiring date, or
   • Upon passing the standards for regularization at any time during the probationary period

In either case, it depends upon the policy of employer

2. Usually necessary and desirable positions wherein regularization may occur if:
   • Employee is not aware of the standards for regularization thus, he is deemed regular from day one
   • Employee is under probationary period but the maximum period of six (6) months is exceeded. Thus, he is regular by operation of law
3. Regular for as long as the activity exists
   • This refers to a casual employee who was made to serve for at least one year. He is deemed regular for as long as such activity exists

Sample Regular Employment Contract

The rules on regular employment are found under Article 295 [formerly Article 280] of the Labor Code, as amended (based on re-numbered labor code).

Get a copy of the re-numbered Labor Code 2018 Edition by Atty. Elvin B. Villanueva

Temporary employment refers to:

1. Probationary
   • Technically, probationary employment should belong to the regular employment category in terms of intention considering that the position created is intended to be regular or part of the plantilla. What makes it temporary is the trial nature of appointment. There is a possibility that the employee holding this position may not stay long such as when he fails to qualify as regular employee based on the reasonable standards made known to him at the time of his engagement.
   • Thus, there is no vested right to this position in the context of security of tenure under Article 294 [formerly Article 279]. To a certain extent, the security of tenure is limited.
     • It is limited because the employee can be dismissed for failure to qualify. The employee is vulnerable to dismissal considering the engagement is on trial period.
     • The trial period can be extended by mutual agreement of the parties when the employee fails to qualify in any of the months set for the trial duration, depending on the policy of employer on the matter.

See Sample Probationary Contract

2. Project
   • This is temporary employment because the employee can be terminated upon completion of the project or phase thereof.
     • The employee may be engaged for the entire project until its completion. For instance, a Project Engineer in a construction project.
     • The employee may be engaged for a certain phase of the project. For example, a Steel Man during the steel work phase of the project. It does not make sense to make these employees regular. The employer cannot be made to pay salary to a Steel Man during the time when steel work is not anymore needed. In the same manner that a Project Engineer should not be employed during the time that there is no more project to manage as it is already completed.
   • There are indicators of project employment which the law looks at to determine its validity. The issue of validity becomes relevant because the employee in this form of employment is given only temporary security of tenure unlike when he is regular where his tenure is more secured. Thus, the control measure is introduced so that no abuse is committed in this practice by making it appear that an individual is hired for a project (limited security of tenure) instead of regular (more secured tenure). The indicators of project employment include:
     1. Duration of the Project
     2. Information given to project employee as to:
        • Duration of the project
        • Nature of his engagement (project employee)
        • Name of project
        • End of his engagement in relation to the project (up to completion of the project or just phase thereof), etc.

3. Name of the Project

4. Project employment contract. See sample Project Employment Contract.

5. Report to DOLE of hiring and termination of project employment

6. Completion bonus (not mandatory but seen as proof of legitimate project engagement)

• Others, please see requirements in the book Human Resource Forms, Notices and Contracts Volume 1.

3. Seasonal
   • This refers to engagement as demanded by the season (Christmas, Summer, Harvest season, etc.). There is a need to augment the work force due to pressure of the need for service. For instance, department stores need an increase in manpower during the Christmas season where there are more shoppers.
     • Owners of resort business feel the need for more workers during summer due to increase in the number of tourists.
     • They are temporary in nature because these workers need to go after the end of the season. It does not make sense for employers to keep them on payroll when demand has already subsided or when it is off-season.
   • To ensure its validity, employers have to make a correct Seasonal Employment contract. Without such contract it may be deemed that the employee is a regular employee.

Sample Seasonal Employment Contract

4. Casual
   • An employee may be engaged to do work that is not usually necessary or desirable in the usual trade or business of employer. For instance, a company engaged in software development needs computer programmer. The position is directly related to its business. Without the programmer it may not have a product to sell. But it may also need a Liaison Officer to process its permits and registrations with the government. This position however, is not directly related. It has no direct correlation to the creation of products which the company sells.
   • Casual employees though who have served at least one year, whether continuous or broken, can become regular employees. At least for as long as such activity exists.

See Sample Casual Employment Contract

5. Fixed-Term or Fixed-Period Employment
   • This refers to those engagement where the parties agreed on an employment for a specific period or term.
   • This form of engagement is on the danger side in a sense that there is a high risk that authorities may find the employee regular. Why? This form of employment can exist even when the job is directly related or for a period longer than six months. Take note that authorities generally consider positions which are directly related as regular. The same treatment is accorded to functions which are performed beyond six months.
   • In a manner of speaking, the odds are stacked against the employer to prove validity of fixed-term employment.
   • To be valid, the employer must come up with a fixed-term contract. See sample Fixed-Term Contract
     • This contract must be knowingly and voluntarily agreed upon by the parties
     • There should be no moral dominance by one over the other
     • No duress, improper pressure, force, or intimidation was applied on the individual to agree to this form of employment

This form of employment is actually necessary in certain situations. For example, a regular female employee, who went on maternity leave, cannot be temporarily replaced by an individual who will become regular thereafter.

Why? By the time the worker who went on maternity returns there will be two of them occupying the same regular position. That does not make business sense. Why will the employer pay for two people when he needs only the regular service from one of them? Without fixed-term arrangement the employer will be violating the law on termination of employment because he would be forced to terminate the temporary replacement. On what ground? Definitely it cannot be the ground used for casual, project, seasonal, or probationary since he was not hired for any of these forms of employment. The only acceptable rule here is fixed-term employment.

Fixed-term employment is not found in the Labor Code. It is expressed under the Civil Code as recognized by the Supreme Court in the case of Brent School vs. Zamora and in all other cases.

Finally, third party employment refers to individuals deployed in a principal by a contractor. They are not employees of the principal but they do service in the same establishment. This is governed by the rules on job contracting. From the perspective of the principal or client of the contractor, there is no employer-employee relationship.

In all of the forms of employment discussed, the crucial item is the formulation or crafting of the appropriate contract. This is a make-or-break situation on the part of the employer.

In case of doubt as to what form of employment the employee has been engaged, it will be resolved in favor of employee. Regular employment will always be the most favorable form. Thus, any doubt will render the arrangement regular employment.

Dismissing employees which the employer thought to be project but the law deems as regular will be illegal.

See the effects of employee dismissal in a book Guide to Valid Dismissal of Employees.