Presumption of Regular Employment Applies in the Absence of Clear Employment Agreement

Presumption of Regular Employment Applies in the Absence of Clear Employment Agreement

Regular employment is presumed in the absence of a clear agreement or contract, whether written or otherwise, which would clearly show that the employee was properly informed of his employment status with employer.

In the case of Regala vs. Manila Hotel Corporation, a waiter (Regala) in a hotel (MCH), the Supreme Court (SC) ruled that the employee is a regular employee where the court found that he was performing activities which are necessary and desirable, if not indispensable, in the business of the hotel. Moreover, he has been working for several years.

The employment status of a person is defined and prescribed by law and not by what the parties say it should be. (Regala vs. Manila Hotel Corporation, G.R. No. 204684, October 05, 2020)

Article 295 of the Labor Code “provides for two types of regular employees, namely: (a) those who are engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer (first category); and (b) those who have rendered at least one year of service, whether continuous or broken, with respect to the activity in which they are employed (second category).”

While hotel insists that the employee was engaged under a fixed-term employment agreement, the circumstances and evidence on record, and provision of law, however, dictate that the complainant is its regular employee.

First, Regala is performing activities which are usually necessary or desirable in the business or trade of MHC. This connection can be determined by considering the nature of the work performed by Regala and its relation to the nature of the particular business or trade of MHC in its entirety.

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Being part of the hotel and food industry, MHC, as a service-oriented business enterprise, depends largely on its manpower complement to carry out or perform services relating to food and beverage operations, event planning and hospitality. As such, it is essential, if at all necessary, that it retains in its employ waiting staff, such as Regala, specifically tasked to attend to its guests at its various dining establishments.

Notably, the desirability of his functions is bolstered by the fact that MHC retains in its employ regular staff of waiters charged with like duties or functions as those of Regala’s.

Second, the fact alone that Regala was allowed to work for MHC on several occasions for several years under various Service Agreements is indicative of the regularity and necessity of his functions to its business. Moreover, it bears to emphasize that MHC has admitted, albeit implicitly, that it renewed Regala’s Service Agreements on various occasions, i.e., during temporary spikes in the volume of its business since February 2000.

Thus, the continuing need for his services for the past several years is also sufficient evidence of the indispensability of his duties as waiter to MHC’s business. Additionally, Regala has already been working with the hotel for many years when he was supposedly constructively dismissed from employment on December 2, 2009.

The SC also noted that MHC failed to deny that Regala’s work as waiter is necessary and desirable to its business.

It is argued that the fact that the nature of Regala’s work is necessary and indispensable to its business did not impair the validity of the Service Agreements which specifically stipulated that his employment was only for a specific term or duration. The MHC asserts that there was no regular employment, rather fixed-term as shown by the Service Agreements.

The SC held that while there is nothing contradictory between the nature of an employee’s duties and the setting of a definitive period of his or her employment, if the periods have been imposed to preclude acquisition of tenurial security by the employee, such fixed term contracts are disregarded for being contrary to law and public policy.

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