Project Employee and Indicators of this Form of Employment

Project employee has been defined to be 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. (Human Resource Forms, Notices & Contracts Volume 1 by Atty. Elvin B. Villanueva, citing Philippine National Construction Corporation vs. National Labor Relations Commission, G.R. No. 85323, 20 June 1989, 174 SCRA 191; See also Mercado vs. NLRC, G.R. No. 79869 September 5, 1991)

Essentially, the Labor Code classifies four (4) kinds of employees, namely: (i) regular employees or those who have been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer; (ii) project employees or those 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 employees’ engagement; (c) seasonal employees or those who perform services which are seasonal in nature, and whose employment lasts during the duration of the season; and (d) casual employees or those who are not regular, project, or seasonal employees. Jurisprudence has added a fifth kind fixed-term employees or those hired only for a definite period of time. (Bajaro vs. Metro Stonerich Corp., G.R. No. 227982, April 23, 2018)

In this post, the focus is on project employment or project employees. Now, it was held that the service of project employees are co-terminus with the project and may be terminated upon the end or completion of that project or project phase for which they were hired. (See Millennium Erectors Corporation v. Virgilio Magallanes, G.R. No. 184362, November 15, 2010.)

Length of service is not the controlling determinant of the employment tenure of a project employee, but whether the employment has been fixed for a specific project or undertaking, its completion has been determined at the time of the engagement of the employee. (William Uy Construction Corp v. Jorge R. Trinidad, G.R. No. 183250, March 10, 2010)

Important things to remember in a project employment contract:

1. It is for a specific project or undertaking; and

2. The completion or termination of the project has been determined at the time of their engagement.

In fact, Article 295 of the Labor Code provides, in part, that in a project employment, 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.

Project employment distinguishes itself from regular employment when an employee is 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 employer is tasked with the burden of proving project employment being a form of employment with a limited security of tenure. The nature of employment should be clearly stated in the agreement. There are indicators of project employment that labor authorities look for to ascertain whether it is a valid project employment contract or a mere circumvention of the rule on regular employment.

Either one or more of the following circumstances, among others, may be considered as indicators that an employee is a project employee. (Hanjin Heavy Industries and Construction Co. Ltd., vs. Ibañez, G.R. No. 170181, June 26, 2008)

(a) The duration of the specific/identified undertaking for which the worker is engaged is reasonably determinable.

(b) Such duration, as well as the specific work/service to be performed, is defined in an employment agreement and is made clear to the employee at the time of hiring.

(c) The work/service performed by the employee is in connection with the particular project/undertaking for which he is engaged.

(d) The employee, while not employed and awaiting engagement, is free to offer his services to any other employer.

(e) The termination of his employment in the particular project/undertaking is reported to the Department of Labor and Employment (DOLE) Regional Office having jurisdiction over the workplace within 30 days following the date of his separation from work, using the prescribed form on employees’ terminations/dismissals/suspensions.

(f) An undertaking in the employment contract by the employer to pay completion bonus to the project employee as practiced by most construction companies.

Generally, Courts would conclude that an employment is regular the fact that the employee is made to perform services that are directly related to the business of the company.

However, the Supreme Court held in the case of Bajaro vs. Metro Stonerich Corp., (G.R. No. 227982, April 23, 2018) that it is not uncommon for a construction firm to hire project employees to perform work necessary and vital for its business.

Suffice it to say, in William Uy Construction Corp. and/or Uy, et al. v. Trinidad, (629 Phil. 185 (2010).) the Court acknowledged the unique characteristic of the construction industry and emphasized that the laborer’s performance of work that is necessary and vital to the employer’s construction business, and the former’s repeated rehiring, do not automatically lead to regularization.

Again, the employer has the burden to prove validity of project employment. The litmus test for determining whether particular employees are properly characterized as project employees, as distinguished from regular employees, is whether or not the 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. (Innodata Knowledge Services, Inc. vs. Inting, G.R. No. 211892, 06 December 2017)

Bear in mind that if doubt persists in an employment relationship, the more favorable status, which is regular shall prevail. Under Art. 4 of the Labor Code, doubts are resolved in favor of employees.

Hence, employers should be careful in crafting project employment contracts so as not to create doubt on the true nature of the employment engagement. This is technical insofar as there are requirements and indicators to satisfy.

Even though the absence of a written contract does not by itself grant regular status to respondents, such a contract is evidence that respondents were informed of the duration and scopeof their work and their status as project employees.34 As held in Hanjin Heavy Industries and Construction Co., Ltd. v. Ibañez,35 citing numerous precedents on the matter, where no other evidence was offered, the absence of the employment contracts raises a serious question of whether the employees were properly informed of their employment status as project employeesat the time of their engagement, viz.:

While the absence of a written contract does not automatically confer regular status, it has been construed by this Court as a red flag in cases involving the question of whether the workers concerned are regular or project employees.

In Grandspan Development Corporation vs. Bernardoand Audion Electric Co., Inc. vs. National Labor Relations Commission, the Supreme Court took note of the fact that the employer was unable to present employment contracts signed by the workers, which stated the duration of the project.

In another case, Raycor Aircontrol Systems, Inc. v. National Labor Relations Commission, the SC refused to give any weight to the employment contracts offered by the employers as evidence, which contained the signature of the president and general manager, but not the signatures of the employees. In cases where this Court ruled that construction workers repeatedly rehired retained their status as project employees, the employers were able to produce employment contracts clearly stipulating that the workers’ employment was coterminous with the project to support their claims that the employees were notified of the scope and duration of the project.

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Hence, even though the absence of a written contract does not by itself grant regular status to employees, such a contract is evidence that they were informed of the duration and scope of their work and their status as project employees. Where no other evidence was offered, the absence of an employment contract puts into serious question whether the employees were properly informed at the onset of their employment status as project employees. It is doctrinally entrenched that in illegal dismissal cases, the employer has the burden of proving with clear, accurate, consistent and convincing evidence that a dismissal was valid.

These principles and rulings emphasize the importance of having a project employment contract between the parties. Most especially, that the employer has to prove that it exists and that it is valid. Otherwise, the relationship will only be deemed as regular.

See sample project employment contract here (English version).