How to Handle the Contracts of Project Employees when there are Multiple Projects

How to Handle the Contracts of Project Employees when there are Multiple Projects

sample project employment contract english versionProject employment is an exception to the rule on regular employment if all the requisites are complied with.

A project employee under now Article 295 of the Labor Code, as amended, is one whose employment has been fixed for a specific project or undertaking, the completion or termination of which has been determined at the time of the engagement of the employee. (Herma Shipyard, Inc. vs. Oliveros, G.R. No. 208936, April 17, 2017)


“Art, 295. Regular and Casual Employment. –The provisions of written agreement for the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season.”

The “project” for the carrying out of which “project employees” are hired would ordinarily have some relationship to the usual business of the employer. (Toyo Seat Philippines Corporation vs. Velasco, G.R. No. 240774, March 03, 2021)

The “project” undertaking might not have an ordinary or normal relationship to the usual business of the employer. According to the Supreme Court (SC), in this latter case, the determination of the scope and parameters of the “project” becomes fairly easy. (Citing ALU-TUCP vs. National Labor Relations Commission, 304 Phil. 844 (1994).)

For the SC, it is unusual (but still conceivable) for a company to undertake a project which has absolutely no relationship to the usual business of the company; thus, for instance, it would be an unusual steel-making company which would undertake the breeding and production of fish or the cultivation of vegetables.

There should be no difficulty in designating the employees who are retained or hired for the purpose of undertaking fish culture or the production of vegetables as “project employees,” as distinguished from ordinary or “regular employees,” so long as the duration and scope of the project were determined or specified at the time of engagement of the “project employees.” For, as is evident from the provisions of Article 280 [now 295] of the Labor Code, quoted earlier, the principal test for determining whether particular employees are properly characterized as “project employees” as distinguished from “regular employees,” is whether or not the “project employees” were assigned to carry out a “specific project or undertaking,” the duration (and scope) of which were specified at the time the employees were engaged for that project.

The term “project” could also refer to, secondly, a particular job or undertaking that is not within the regular business of the corporation. Such a job or undertaking must also be identifiably separate and distinct from the ordinary or regular business operations of the employer. The job or undertaking also begins and ends at determined or determinable times.

The ALU-TUCP ruling has since become entrenched in our jurisprudence.40 Accordingly, workers may be considered project employees regardless of the nature of the work they perform, as long as the essential elements of project employment are alleged and proven, i.e., 1) that they were hired for a specific project or undertaking; and 2) the completion or termination of the project or undertaking for which they were hired has been determined at the time of their engagement.

Project employment is further regulated by DOLE Department Order No. 19, Series of 1993 (DO 19-1993).

However, there are companies which assign the project employee to multiple projects. Since the project employee has to have a project employment contract, how should the company handle the situation where there are several ongoing projects.

For instance, if Steelman A is contracted for Project X and the Project Employment contract is made for such undertaking for a period of 6 months.

Subsequently, after 2 months, the company needed a steelman for its Project Y and it decided to deploy A which shall be completed in 7 months. Then after a month needed the same service for its Project Z and also deployed Y with project duration of 6 months.

How should HR treat such situation? To summarize the project deployments:

Project X     6 months

Project Y     7 months

Project Z     6 months

Let us say the company engaged A for Project X on 1 September 2022, which shall be completed in 1 March 2023. However, on 1 November 2022, the company needed A for Project Y for the same role as Steelman. Thus, they should enter another project contract which ends in seven months or until 1 May 2023.

Now, Project Z came up with has a duration of 6 months which based on facts was entered into on 1 December 2022 which shall end on 1 June 2023. The company should also execute a Project Employment contract for this.

The reason the company should enter into a project employment contract for each project engagement is to prove that the reason he continued to stay in service by the company is brought about by his being a project employee and not a regular employee.

If the company would do it this way and only execute one contract (for Project X), then it would be faced with a situation where on 1 March 2023 Project X is already completed and yet A is still rendering service for the company on account of Projects Y and Z.

In the absence of project employment contracts for Y and Z, the continued service of A beyond the completion of his Project Employment Contract for Project X would be considered as regular employment and not project.

At any rate, below are sample project employment contracts to make it easy for HR practitioners, business owners, and managers to craft:

  1. Project Employment Contract – English Version Soft Copy
  2. Project Employment Contract – Filipino / Tagalog Soft Copy

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