The law recognizes these various arrangements by the employer and the employee depending on the nature of the employment: regular, probationary, project, fixed-period or term, seasonal, casual.

These different setups are due to various reasons. For regular employment, the employer benefits from a full-time employee who in turn will receive all statutory and company benefits. Meanwhile, in probationary employment, the employer has the opportunity to assess the performance of the employee who will prove that he is suitable for the position. As for project, fixed-period or term, seasonal, and casual employments, the employer and the employee mutually benefits from an arrangement where neither one will be committed to continue employment after the expiration of he project, term, season, or incidental activity.

Regular employment

A regular employee is one who has been engaged to perform activities which are “usually necessary or desirable in the usual business or trade of the employer.”[1]

The definition of a regular employee is problematic. While the phrase “usually necessary” may be a good defining trait, the next description of usually “desirable” makes a case for every kind of employee to be regular. After all, would not an employee necessarily argue that his/her responsibilities are desirable even if it is to clean the office or prepare coffee? These have been the common theme in numerous labor complaints.

Notwithstanding the above-mentioned definition, the following are deemed regular employees by law pursuant to rules on giving full protection to labor and to interpret employment contracts in favor of labor in case of doubt:

  • A casual employee who has rendered at least one year of service, whether continuous or broken, with respect to the activity in which he is employed and his employment continues while such activity exists;[2]
  • A probationary employee who has been allowed to continue work despite the last day of the probationary period;[3]
  • A probationary employee who was not informed of the standards under which he/she will qualify as a regular employee on/before at the time of engagement;[4]
  • A project employee when the following conditions concur: (a) there is a continuous rehiring of the project employee event after the cessation of a project; and (b) the tasks performed by the alleged project employees is vital, necessary, and indispensable to the usual business or trade of the employer;[5]
  • A fixed-period or term employee whose employment fails to comply with the following two-fold criteria: (a) a fixed period of employment was agreed upon knowingly and voluntarily by the parties, without any force, duress or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent; or (b) where it satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the former over the latter;[6] and
  • A learner whose training is terminated by the employer before the end of the stipulated period without any fault of the former provided he has been allowed or suffered to work during the first two months.[7]

As regular employment if often an issue in a labor dispute, it is crucial for the management to clearly delineate who among their employees are regular. These may be done through well-crafted employment contracts and company policies.

Probationary employment

A probationary employee is one who is made to undergo a probationary employment not exceeding six months reckoned from the first working day.[8] The purpose of the probationary period is for the employee “to undergo a trial period during which the employer determines his fitness to qualify for regular employment based on reasonable standards made known to him at the time of engagement.”[9]

By its very definition, the probationary period is up to six months only. The probationary employee who has been made to work beyond the probationary period automatically becomes a regular employee.[10]

By way of exception to the non-extendible probationary period, the Labor Code allows allows an extension if the employment is covered by an apprenticeship agreement.[11] Further, in a unique case, the Supreme Court held that an extension of the probationary period was valid resulting from the generosity or liberality of the employer in providing the employee a chance.[12]

Mariwasa Manufacturing, Inc., v.  Leogardo, Jr.
G.R. No. 74246, 26 January 1989

Complainant Joaquin A. Dequila filed an illegal dismissal case against Defedant Mariwasa Manufacturing, Inc. Previously, defendant hired complainant as a general utility worker with a 6 months probationary period. After failing to meet the required standards, defendant gave complainant another chance by extending his probation for another 3 months, with his written consent. Complainant still did not qualify.

HELD: Defendant was not liable. In this case, “the extension of Dequila’s probation was ex gratia, an act of liberality on the part of his employer affording him a second chance to make good after having initially failed to prove his worth as an employee. Such an act cannot now unjustly be turned against said employer’s account to compel it to keep on its payroll one who could not perform according to its work standards. The law, surely, was never meant to produce such an inequitable result.”

Thus, by voluntarily agreeing “to an extension of the probationary period, Dequila in effect waived any benefit attaching to the completion of said period if he still failed to make the grade during the period of extension. The Court finds nothing in the law which by any fair interpretation prohibits such a waiver. And no public policy protecting the employee and the security of his tenure is served by prescribing voluntary agreements which, by reasonably extending the period of probation, actually improve and further a probationary employee’s prospects of demonstrating his fitness for regular employment.”

Best Legal Practices:

Refrain from extending probationary period – As labor laws are interpreted in favor of labor when doubts arise, the employer should refrain from extending the probationary period. If the employer decides to extend the probationary period out of generosity, there should be a separate contract to that effect stating the circumstances, particularly the fact that such extension is a gratuitous act by the employer.

Stipulate standards to be met for regularization – An employment contract with a probationary period should clearly state therein the standards (or criteria) to be met by the probationary employee in order to become a regular employee.

Release results of probationary employment before last day of probationary period – To avoid having a probationary employee become automatically a regular employee, the results of the probationary employment (whether he/she passed the standards) should be released before the last day of probationary employment. It is wise to do so at least a month before the last day so that it will not be missed out, as well as to have time for the clearance process.

On/before the time of engagement, the employer is required to inform probationary employees of the reasonable standards under which they will qualify as regular employees.[13] A probationary employee is deemed a regular employee where no standards are made known him at the time of engagement unless the job is self-descriptive, like maid, cook, driver, or messenger.[14]

Project employment 

A project employee is one whose employment has been fixed for a specific project or undertaking such that the completion or termination of which has been determined at the time of the engagement of the employee.[15]

Due care should be observed in project employment. As stated earlier, a project employee is considered a regular employee when the following conditions concur: (a) there is a continuous rehiring of the project employee event after the cessation of a project; and (b) the tasks performed by the alleged project employees is vital, necessary, and indispensable to the usual business or trade of the employer.[16]

ACLATEL Philippines, Inc. v.  Relos
G.R. No. 164315, 03 July 2009

Complainant Rene R. Relos field a complaint for illegal dismissal with monetary claims against defendant Alcatel Philippines. Previously, complainant was repeatedly rehired in various capacities (estimator/draftsman, civil works inspector, civil engineer, etc.) for several projects of defendant from January 1988 to December 1993 (with different periods, from 1 to 11 months). On 31 December 1995, complainant’s last contract terminated. In March 1997, he instituted the labor case claiming that he was illegally dismissed as he was a regular employee.

“Alcatel argues that respondent was a project employee because he worked on distinct projects with the terms of engagement and the specific project made known to him at the time of the engagement.  Alcatel clarifies that [complainant’s] employment was coterminous with the project for which he was hired and, therefore, [complainant] was not illegally dismissed but was validly dismissed upon the expiration of the term of his project employment.  Alcatel explains that its business relies mainly on the projects it enters into and thus, it is constrained to hire project employees to meet the demands of specific projects.

On the other hand, [complainant] insists that he is a regular employee because he was assigned by Alcatel on its various projects since 4 January 1988 performing functions desirable or necessary to Alcatel’s business. [Complainant] adds that his employment contracts were renewed successively by Alcatel for seven years.  [Complainant] contends that, even assuming that he was a project employee, he became a regular employee because he was re-hired every termination of his employment contract and he performed functions necessary to Alcatel’s business.  [Complainant] also claims that he was illegally dismissed because he was dismissed during the existence of the project.”

HELD: Defendant was not liable; complainant was a project employee.The principal test for determining whether a particular employee is a project employee or a regular employee is whether the project employee was assigned to carry out a specific project or undertaking, the duration and scope of which were specified at the time the employee is engaged for the project. ‘Project’ may refer to a particular job or undertaking that is within the regular or usual business of the employer, but which is distinct and separate and identifiable as such from the undertakings of the company.  Such job or undertaking begins and ends at determined or determinable times.

The complainant was a project employee. “The specific projects for which respondent was hired and the periods of employment were specified in his employment contracts.  The services he rendered, the duration and scope of each employment are clear indications that respondent was hired as a project employee.

While complainant was continuously rehired by Alcatel and he “performed tasks that were clearly vital, necessary and indispensable to the usual business or trade of Alcatel, respondent was not continuously rehired by Alcatel after the cessation of every project.  Records show that respondent was hired by Alcatel from 1988 to 1995 for three projects, namely the PLDT X-5 project, the PLDT X-4 IOT project and the PLDT 1342 project.  On 30 April 1988, upon the expiration of respondent’s contract for the PLDT X-4 IOT project,  Alcatel did not rehire respondent until 1 February 1991, or after a lapse of 33 months, for the PLDT 1342 project.   Alcatel’s continuous rehiring of respondent in various capacities from February 1991 to December 1995 was done entirely within the framework of one and the same project ―  the PLDT 1342 project.  This did not make [complainant] a regular employee of Alcatel as respondent was not continuously rehired after the cessation of a project.  [Complainant] remained a project employee of Alcatel working on the PLDT 1342 project.

“The employment of a project employee ends on the date specified in the employment contract.  Therefore, respondent was not illegally dismissed but his employment terminated upon the expiration of his employment contract…” (Emphasis supplied.)

Best Legal Practices:

Stipulate clearly the paramaters for project or fixed-period employment – In order to avoid doubts on the status of an employee, the employment contract should clearly stipulate the terms and conditions for the project employment. In particular, the project should be clearly specified.

Refrain from continuous rehiring of the same project employee – While project employment is valid, a continuous rehiring of the same project employee who performs work that is vital, necessary and indispensable to the usual business or trade of the employer, may result in the latter becoming a regular employee by operation of law.

D.M. Consunji, Inc. v. Jamin
G.R. No. 192514, 18 April 2012

Complainant Estelito L. Jamin initiated an illegal dismissal case against defendant D.M. Consunji, Inc. Prior thereto, defendant repeatedly rehired complainant as a carpenter for several projects. Complainant claimed that he served the company for almost 31 years making him a regular employee. In its defense, defendant claimed that complainant was hired on a project-to-project basis.

HELD: The company was liable. Complainant was a regular employee. For a period of 31 years, “DMCI had repeatedly, continuously and successively engaged Jamin’s services since he was hired on December 17, 1968 or for a total of 38 times — 35 as shown by the schedule of projects submitted by DMCI to the labor arbiter and three more projects or engagements added by Jamin, which he claimed DMCI intentionally did not include in its schedule so as to make it appear that there were wide gaps in his engagements.”

Thus, “while the contracts indeed show that Jamin had been  engaged as a project employee, there was an almost unbroken string of Jamin’s rehiring from December 17, 1968 up to the termination of his employment on March 20, 1999.” Moreover, “all the 38 projects where DMCI engaged Jamin’s services, the tasks he performed as a carpenter were indisputably necessary and desirable in DMCI’s construction business.”

When a project ends so does the employment of a project employee. As held in the Alcatel case, the termination of the project by which a project employee was engaged does not result in illegal dismissal.[17]

With project employment, the issue usually raised in a labor dispute is often whether a particular project or undertaking is valid. That is to say, may an employer create a project or undertaking which is necessary to the business or trade? As the law does not make any limitation on such a project or undertaking, the employer may do so provided it is in compliance with law on project employment and it is not done to circumvent the employee’s security of tenure.

Fixed-period or term employment

A fixed-period or term employee is one whose employment is only for a particular duration which has been made known to the employee at the time of his engagement.[18]

As with project employment, due care should be observed in fixed-period or term employment. A fixed-period or term employee becomes a regular employee if the employment fails to comply with the following two-fold criteria: (a) a fixed period of employment was agreed upon knowingly and voluntarily by the parties, without any force, duress or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent; or (b) where it satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the former over the latter.[19]

Brent School, Inc. v. Zamora
G.R. No. 48494, 05 February 1990 (En Banc)

Complainant Doroteo R. Alegre filed an illegal dismissal case against defendant Brent School, Inc., after the latter terminated his employment. Previously, defendant engaged complainant as the school’s athletic director for a specific term consisting of five years. Months prior to the end of the period, defendant furnished DOLE and complainant a notice of termination due to “completion of contract, expiration of the definite period of employment.” Complainant signed a receipt sating therein that he has received “full payment” for his service under the contract. Notwithstanding, complainant protested his termination claiming that he was a regular employee since his services were “necessary and desirable in the usual trade or business of his employer” adding to the fact that he was employed for five years. Meanwhile, the DOLE Regional Director refused to give clearance to defendant and instead directed complainant’s reinstatement as a “permanent employee” stating that the Labor Code did not recognize the ground cited by defendant. Relevant to this case is that the parties entered into the employment contract prior to the effectivity of the Labor Code.

HELD: Defendant was not liable for terminating the employment as complainant was a fixed-period or term employee. Hence, his employment ended after the period. He was not illegally dismissed. While the parties executed the contract prior to the Labor Code, the laws in force then allowed for fixed-period employment as expressed in the Civil Code which recognize contracts with fixed or definite periods.

The definition of a regular employee does not exclude a fixed-period or term employee. “From the premise — that the duties of an employee entail ‘activities which are usually necessary or desirable in the usual business or trade of the employer the’ — conclusion does not necessarily follow that the employer and employee should be forbidden to stipulate any period of time for the performance of those activities. There is nothing essentially contradictory between a definite period of an employment contract and the nature of the employee’s duties set down in that contract as being ‘usually necessary or desirable in the usual business or trade of the employer.’ The concept of the employee’s duties as being “usually necessary or desirable in the usual business or trade of the employer” is not synonymous with or identical to employment with a fixed term.Logically, the decisive determinant in term employment should not be the activities that the employee is called upon to perform, but theday certain agreed upon by the parties for the commencement and termination of their employment relationship, a day certain being understood to be “that which must necessarily come, although it may not be known when. x x x” (Emphasis supplied.)

Fixed-period or term employment is a recognized practice in certain industries. “Some familiar examples may be cited of employment contracts which may be neither for seasonal work nor for specific projects, but to which a fixed term is an essential and natural appurtenance: overseas employment contracts, for one, to which, whatever the nature of the engagement, the concept of regular employment will all that it implies does not appear ever to have been applied, Article 280 of the Labor Code not withstanding; also appointments to the positions of dean, assistant dean, college secretary, principal, and other administrative offices in educational institutions, which are by practice or tradition rotated among the faculty members, and where fixed terms are a necessity, without which no reasonable rotation would be possible. Similarly, despite the provisions of Article 280, Policy, Instructions No. 8 of the Minister of Labor 27 implicitly recognize that certain company officials may be elected for what would amount to fixed periods, at the expiration of which they would have to stand down, in providing that these officials… may lose their jobs as president, executive vice-president or vice-president, etc. because the stockholders or the board of directors for one reason or another did not re-elect them.”

To avoid situations wherein fixed-period employment is used to circumvent the employee’s right to security of tenure, the Supreme Court laid down these limitations. “Accordingly, and since the entire purpose behind the development of legislation culminating in the present Article 280 of the Labor Code clearly appears to have been, as already observed, to prevent circumvention of the employee’s right to be secure in his tenure, the clause in said article indiscriminately and completely ruling out all written or oral agreements conflicting with the concept of regular employment as defined therein should be construed to refer to the substantive evil that the Code itself has singled out: agreements entered into precisely to circumvent security of tenure. It should have no application to instances where a fixed period of employment was agreed upon knowingly and voluntarily by the parties, without any force, duress or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent, or where it satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the former over the latter. Unless thus limited in its purview, the law would be made to apply to purposes other than those explicitly stated by its framers; it thus becomes pointless and arbitrary, unjust in its effects and apt to lead to absurd and unintended consequences.”

Best Legal Practices:

Clearly stipulate the terms and conditions of fixed-period or term employment – As fixed-period or term employment is often struck down for violating the rule on security of tenure, the fixed-period or term employment contract should clearly stipulate therein the terms and conditions thereof. Afterwards, these should be diligently observed.

Unlike other employment arrangements which are specifically recognized by the Labor Code, fixed-period or term employment is one recognized through jurisprudence starting with the Brent case. While there is a caselaw affirming the validity of fixed-period or term employment, there are numerous cases wherein such an arrangement has been struck down for violating the employee’s security of tenure.

As a result, fixed-period or term employment is the riskiest of the various employment arrangements. As  a matter of practice, it should be avoided whenever practicable.

Seasonal employment

A seasonable employee is one whose employment covers work or services to be performed that is “seasonable in nature” with the employment for the duration of such season.[20]

While seasonal employment has previously been associated with plantation workers whose numbers grow during harvest time, the modern trend now is that such employment is also being observed in businesses where demand is high on the industry’s peak season. For instance, hotels, resorts, or restaurants hire more staff during summer vacations or holidays to meet the surging demand.

Similar to a project employee, the termination of a seasonal employee due to the end of the season is not illegal dismissal.[21]

Casual employment

A casual employee is one who performs functions that are incidental, or those not necessary or desirable in the usual trade or business of the employer, for a limited duration.[22]

Also, if a casual employee “has been performing the job for at least one year, even if the performance is not continuous or merely intermittent, the law deems the repeated and continuing need for its performance as sufficient evidence of the necessity, if not indispensability of that activity to the business of the employer.  Hence, the employment is also considered regular, but only with respect to such activity and while such activity exists. The law does not provide the qualification that the employee must first be issued a regular appointment or must be declared as such before he can acquire a regular employee status.”[23]

 

– – –

[1] LABOR CODE. Article 294.

[2] Ibid. Paragraph 2, Article 294.

[3] Robinsons Galleria/Robinsons Supermarket Corporation, et al., v. Irene R. Sanchez, G.R. No. 177937, 19 January 2011, citing Omnibus Rules Implementing the Labor Code, Book VI, Rule I, Sec. 6.

[4] Ibid.

[5] Maraguinot, Jr. v. NLRC, 348 Phil. 580 (1998).

[6] Brent School, Inc., et al., v. Ronaldo Zamora, et al., G.R. No. L-48494, 05 February 1990

[7] LABOR CODE. Article 75 (d).

[8] Ibid. Article 295.

[9] Ibid.

[10] Robinsons Galleria/Robinsons Supermarket Corporation, et al., v. Irene R. Sanchez, G.R. No. 177937, 19 January 2011, citing Omnibus Rules Implementing the Labor Code, Book VI, Rule I, Sec. 6.

[11] Ibid.

[12] Mariwasa Manufacturing, Inc., v. Leogardo, Jr., G.R. No. 74246, 26 January 1989.

[13] Id at 48.

[14] Id at 42.

[15] LABOR CODE. Article 294; See also Sandoval Shipping, Inc. v. National Labor Relations Commision, 136 SCRA 674; Philippine National Construction Corporation v. National Labor Relations Commission, G.R. No. 85323, 20 June 1989.

[16] Maraguinot, Jr. v. NLRC, 348 Phil. 580 (1998).

[17] Alcatel Philippines, Inc. v. Relos, G.R. No. 164315, 03 July 2009.

[18] Id at 45.

[19] Brent School, Inc., et al., v. Ronaldo Zamora, et al., G.R. No. L-48494, 05 February 1990

[20] LABOR CODE. Article 294.

[21] Ibid. Paragraph 2, Article 294.

[22] Ibid.

[23] Philips Semiconductor (Phils.), Inc., v. Fadriquela, G.R. No. 141717, 14 April 2004.