Mindset in Crafting Project Employment Contract with Partial Sample Template

Employers should be careful in crafting project employment contract as to ensure that there is no ambiguity in the terms agreed upon and the legal requirements are all present.

Under Article 295 of the Labor Code, as amended, an employment is 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.

There is an exception. One of which is 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. This refers to project employment.

As a rule, an exception is always subject to proof which means that he who claims exception should present evidence to be entitled thereto. In the case of project employment proof should be presented that indeed the employer and the employee agreed to a project employment contract.

The services of project employees are coterminous with the project and may be terminated upon the end or completion of that project for which they were hired. Regular employees, in contrast, are legally entitled to remain in the service of their employer until their services are terminated by one or another of the recognized modes of termination of service under the Labor Code.

Article 297, according to the Supreme Court was emplaced in our statute books to prevent the circumvention of the employee’s right to be secure in his tenure by indiscriminately and completely ruling out all written and oral agreements inconsistent with the concept of regular employment defined therein. [See Violeta vs. NLRC, G.R. No. 119523, October 10, 1997]

Where an employee has been engaged to perform activities which are usually necessary or desirable in the usual business of the employer, such employee is deemed a regular employee and is entitled to security of tenure notwithstanding the contrary provisions of his contract of employment.

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. As defined, project employees are those workers hired (1) for a specific project or undertaking, and (2) the completion or termination of such project or undertaking has been determined at the time of engagement of the employee.

Employers who make the mistake of omitting the elements required for valid project employment may face demand for regular status. This is so because any ambiguity in the employment contract is resolved in favor of labor consistent with Article 4 of the Labor Code.

Following the requirements, below is partial sample of the Project Employment Contract that can help business owners, managers, HR practitioners, etc., in making sure that the contract complies with the mandate.

“CONTRACT FOR PROJECT EMPLOYMENT

KNOW ALL MEN BY THESE PRESENTS:

            This CONTRACT FOR PROJECT 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 with principal place of business at 123 Bldg., Ayala Ave., Makati City, Philippines, represented herein by its President, MR. ____________________, hereinafter known as COMPANY,

-and-

1. ________________________, of legal age, and a resident of _____________________________________________, hereinafter called the PROJECT EMPLOYEE,

WITNESSETH THAT:

WHEREAS, the COMPANY is in need PROJECT EMPLOYEE who will start out as a PROJECT EMPLOYEE;

WHEREAS, the PROJECT EMPLOYEE offered his services to the COMPANY to finish a particular project;

WHEREAS, the agreement shall be on purely project employment relationship where the COMPANY has no control as to the means and methods by which the PROJECT EMPLOYEE performs his work, except as to the results thereof;

THEREFORE, the parties hereby covenant that:

COMMENCEMENT PROJECT EMPLOYMENT

1. The PROJECT EMPLOYEE is engaged for a particular project the scope and duration of which is known to him at the time of engagement;
2. The PROJECT EMPLOYEE shall perform his duties until the completion of the project or phase thereof;
3. This contract shall commence on ________________ and shall remain effective until the completion of the project or phase thereof which is estimated at one (1) year co-terminus with the project with the COMPANY’s client;
4. The PROJECT EMPLOYEE is not a regular employee and shall not be entitled to all the benefits given only to regular employees but is entitled to SSS, PhilHealth, and Pag-Ibig, including mandatory benefits provided by the Labor Code, as applicable;
5. The PROJECT EMPLOYEE is free to offer his services to other companies or seek employment after the completion of the project;
6. The PROJECT EMPLOYEE shall be paid the following cost for his services __________________ PESOS (PhP______.00) per month;

THE PROJECT

7. The PROJECT EMPLOYEE shall act as ___________________ for the project known as ___________________________________;

The expected completion xxxxx” 

Avail of the full version of the Project Employment Contract here:

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