Regular Employment and Necessity to be Covered by Employment Contract

Most business owners, HR practitioners, and managers know that when an employee is of regular status he does not need a written contract to be entitled to the benefits.

This brings the issue of whether it still makes sense to execute a written agreement that such an employee is already of regular status. It is my view that there is still a need to execute the Regular Employment Contract with employee who is able to attain the regular status.

The reason is that it gives parties transparency on the terms agreed upon. While it is true that most labor standards benefits are binding whether stipulated or not, a regular employee usually receives more than the standard benefits. Thus, the need to make these benefits clear.

The reason that the benefits, above the mandated items by labor laws, should be in writing is to ensure that nothing gets lost in translation, so to speak. The Labor Code, under Art. 4 resolves doubts in agreements in favor of labor.

Hence, the company does not want such ambiguity to govern and its stipulation be simply disregarded because doubts prevailed in the terms of the agreement.

Under the Philippine law, an employee becomes regular employee in two ways: 1) By operation of law, that is, if he remains in employment after six months of service as probationary employee, and 2) if he performs activities which are usually necessary and desirable in the business of the company.

The most important aspect to an employee who becomes regular is the stronger security of tenure. This means that a regular employee can only be terminated either for just cause or authorized cause. Unlike when he is probationary wherein he can be terminated for failure to qualify, in addition to the two grounds mentioned.

For instance, if there is doubt as to whether the grant of Christmas Bonus is given annually when the employer indicates in the contract that “Christmas Bonus is guaranteed,” the court may resolve that it should be given annually since it is a more favorable situation to the employee.

This is one of the reasons why an employment contract is important even for regular employees. Also, the main factor why clarity is important in such contract.

Salient Provisions of a Regular Employment Contract: (See Editable Template here of Regular Employment Contract)

1. Parties
2. Whereas Clause
3. Commencement of probationary employment
4. Termination of Employment (Just and Authorized Causes)
5. Place of Posting
6. Duties and responsibilities clause
7. Performance Appraisal
   1. Reasonable Standards Metrics
      1. Performance
      2. Punctuality/Attendance

• Behavior

1. Teamwork
2. Initiative

8. Compensation and Benefits
9. Office Decorum
10. Confidentiality
11. Non-compete Clause
12. Training Expenses
13. Data privacy consent clause