Project-based employees

Dear Atty. Vlad,

I own a small construction company and I hire project-based employees depending on the needs of every project for my clients.

On 20 June 2023, I hired 25 project employees. The project was completed in December 2023. This 15 March 2024, I will have a new project. However, since this new project is smaller in scale, I will only need 15 employees. All 25 employees are hoping I could re-hire them.

Will there be any consequence if I only choose 15 out of those 25 individuals I have previously engaged?

Jaime

Dear Jaime,

Project Employment is recognized under Philippine laws and decisions of the Supreme Court.

In the case of Isabelo Violeta, et al. vs National Labor Relations Commission, et al., (G.R. 119523, 10 October 1997) the Court ruled:

“The principal test for determining whether particular employees are properly characterized as “project employees,” as distinguished from “regular employees,” is whether or not the “project 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. As defined, project employees are those workers hired (1) for a specific project or undertaking, and (2) the completion or termination of such project or undertaking has been determined at the time of engagement of the employee.”

Further, either one or more of the following circumstances among others, may be indicators that an employee is a project employee (Section 2.2, D.O. 19-93):

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

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.

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

The employee, while not employed and waiting engagement, is free to offer his services to any other employer.

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

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

The pro-rata completion bonus may be based on the industry practice which is at least the employee’s one-half (1) month salary for every 12 month service (Section 2.3(a), D.O. 19-93). When there is no undertaking to pay completion bonus, the employee may be considered a non-project employee (Section 3.4 (a), D.O. 19-93).

From the foregoing, so long as you follow the guidelines provided for by law then even if you will not be able to hire again your previous employees in your last project, they cannot claim any illegality.

The employment of your previous employees ended the moment your last project was completed. As for the employees who will be hired again for your new project, it is a fresh start for them and their employment will end again when your next project is completed.

However, when you do not follow the guidelines provided for by law, or, when you assign your employees simultaneously to another project, this will destroy the nature of their being project employees. In such cases, they will now become members of the work pool entitled to security of tenure. This means that their employment may not be dismissed except for just or authorized cause under the Labor Code, as amended.

I hope that I was able to help you in your concern based on what you have told me.

Atty. Vlad del Rosario