Supremacy of the Labor Laws over the Nomenclatures in Employment Contracts
The supremacy of the law over the nomenclature of the contract and the stipulations contained therein is to bring to life the policy enshrined in the Constitution to afford full protection to labor. Labor contracts, being imbued with public interest, are placed on a higher plane than ordinary contracts and are subject to the police power of the State. (GMA Network, Inc. vs. Pabriga, .R. No. 176419. November 27, 2013)
Thus, in a claim of complainants that they are regular employees of a company which, on the other hand, interchangeably characterize their employment as project and fixed period/fixed term employment, the Supreme Court (SC) delved on the matter of contracts of employment.
The terms regular employment and project employment are taken from Article 280 [now 295] of the Labor Code, which also speaks of casual and seasonal employment.
It states, that the provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be 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, except 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 services to be performed is seasonal in nature and employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph. Provided, that, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and
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his employment shall continue while such activity actually exist.
A fifth classification, that of a fixed term employment, is not expressly mentioned in the Labor Code. Nevertheless, this Court ruled in Brent School, Inc. vs. Zamora, [260 Phil. 747 (1990)] that such a contract, which specifies that employment will last only for a definite period, is not per se illegal or against public policy.
According to the SC, pursuant to the above-quoted Article 295 of the Labor Code, employees performing activities which are usually necessary or desirable in the employer’s usual business or trade can either be regular, project or seasonal employees, while, as a general rule, those performing activities not usually necessary or desirable in the employer’s usual business or trade are casual employees.
The reason for this distinction may not be readily comprehensible to those who have not carefully studied these provisions: only employers who constantly need the specified tasks to be performed can be justifiably charged to uphold the constitutionally protected security of tenure of the corresponding workers.
The consequence of the distinction is found in Article 294 of the Labor Code, which provides that in cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by the Labor Code.
An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement.
On the other hand, the activities of project employees may or may not be usually necessary or desirable in the usual business or trade of the employer as held by the SC in ALU-TUCP vs. National Labor Relations Commission, [G.R. No. 109902, August 2, 1994, 234 SCRA 678, 684-686] and Leyte Geothermal Power Progressive Employees Union-ALU-TUCP vs. Philippine National Oil Company-Energy Development Corporation [G.R. No. 170351, March 30, 2011, 646 SCRA 658, 665].
Thus, in order to safeguard the rights of workers against the arbitrary use of the word “project” to prevent employees from attaining the status of regular employees, the SC requires that employers claiming that their workers are project employees should not only prove that the duration and scope of the employment was specified at the time they were engaged, but also that there was indeed a project.
The project could either be (1) a particular job or undertaking that is within the regular or usual business of the employer company, but which is distinct and separate, and identifiable as such, from the other undertakings of the company; or (2) a particular job or undertaking that is not within the regular business of the corporation. 
As it was with regard to the distinction between a regular and casual employee, the purpose of this requirement is to delineate whether or not the employer is in constant need of the services of the specified employee.
If the particular job or undertaking is within the regular or usual business of the employer company and it is not identifiably distinct or separate from the other undertakings of the company, there is clearly a constant necessity for the performance of the task in question, and therefore said job or undertaking should not be considered a project.
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Twin Requirements of Notice and Hearing
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Avail of the full version of the Project Employment Contract here:
- Project Employment Contract – English Version Soft Copy
- Project Employment Contract – Filipino / Tagalog Soft Copy
