Risk in Poorly Crafted Project Employment Contract

Risk in Poorly Crafted Project Employment Contract

sample project employment contract english versionWhen the employer claims that an employee is on project employment basis, it has the burden of proving the validity of such arrangement. Failure to do so shall render the employment regular.

For instance, in the case of Inocentes vs. R. Syjuco Construction, Inc., (July 29, 2019, G.R. No. 237020) where  the employer failed to discharge the burden to prove that the employees were project employees, the NLRC properly found them to be regular employees.

It thus follows that as regular employees, they may only be dismissed for a just or authorized cause and upon observance of due process of law. As these requirements were not observed, the Court found that said employees were illegally dismissed.

Article 295 of the Labor Code, as amended and renumbered, defines a regular employee as (a) one that has been engaged to perform tasks usually necessary or desirable in the employer’s usual business or trade — without falling within the category of either a fixed, a project, or a seasonal employee; or (b) one that has been engaged for a least a year, with respect to the activity he or she is engaged, and the work of the employee remains while such activity exists. On the other hand, a project employee is one whose employment has been fixed for a specified project or undertaking, the completion or termination of which is made known at the time of the engagement of the employee.

In Dacuital vs. L.M. Camus Engineering Corp., the Court stressed that a project employee is assigned to a project that starts and ends at a determined or determinable time. The Court elucidated therein that the principal test to determine if an employee is a project employee is – whether he or she is assigned to carry out a particular project or undertaking, which duration or scope was specified at the time of engagement.

In ascertaining whether employee were project employees, as claimed by the employer, it is primordial to determine whether notice was given them that they were being engaged just for a specific project, which notice must be made at the time of hiring. However, no such prior notice was given by the employer.

The summary of project assignments cannot be considered as the needed notice because it only be a list of assignment. It is not sufficient to prove that the employees were informed or were aware that they were hired for a project or undertaking only.

Also, the fact that the employer did not submit a report with the DOLE (anent the termination of employment due to alleged project completion) further bolsters that employee are not project employees.

In Freyssinet Filipinas Corp. vs. Lapuz, the SC explained that the failure on the part of the employer to file with the DOLE a termination report every time a project or its phase is completed is an indication that the workers are not project employees but regular ones.

The fact that the said employees ceased to work at the end of their purported project contract, this assertion will not hold water since it is not a valid cause to terminate regular employees.

This is in addition to the fact that there was no showing that said employees in the case of Inocentes were given notice of their termination, an evident violation of their right to due process.

Hence, it is important that in a project employment arrangement the employer has to execute a project employment contract with the employee which shall serve as proof of the arrangement. This should contain the provision that the reasonable standards were made known to the employee at the time of engagement.

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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