I have been getting a lot of questions about the legality and implications of hiring project-based employees. I can only surmise that my clients' sudden curiosity can be attributed to today’s dynamic business environment, as project-based hiring allows companies to scale their workforce up or down based on project needs and fluctuating demands.

Hence, I was inspired to write this three-part article on the intricacies of project-based employment, hoping that my knowledge will reach small and midsize enterprises and even start-ups.

Today, we will summarize the landmark cases decided by the Supreme Court on the seeming confusion between regular and project-based employment. The Supreme Court has classified the cases into two strands to synthesize the doctrines. The first strand relates to employment that is deemed regular from the beginning despite insinuations of project employment. Meanwhile, the second strand refers to cases where initially project-based employment ripened into regular employment. (Carpio v. Modair Manila Co. Ltd., Inc., G.R. No. 239622, 21 June 2021)

In the first strand of jurisprudence, despite the employer's claims of project-based employment, the workers were deemed regular employees from the beginning because (a) despite the execution of employment contracts for certain projects, the workers were actually engaged to work in-house, for services vital to the employer's usual trade or business; or (b) the employer failed to substantiate the allegations of project-based employment, even if for just a fraction of the employee's service.

For instance, in Capitol v. NLRC (G.R. No. 105359, 22 April 1993), the Court observed that the employees did not just work in the project sites but were also made to work in-house as welders and warehousemen in the contractor's central shop, office, and warehouse thereby performing work that is "usually necessary and desirable in the employer's usual business or trade." Moreover, the employer had failed to submit termination reports informing the DOLE of the completion of the projects and the consequent termination of the employees. Finally, the Court ruled that the employees worked for the employer not only for a specific period but long after their supposed projects had been finished.  Although not explicitly, the Court essentially ruled that, to begin with, the workers were engaged as regular and not just project employees.

Meanwhile, under the second strand of jurisprudence, workers who were initially engaged as project employees may attain regular status. This particularly happened in the case of Caramol v. NLRC (G.R. No. 102973, 24 August 1993), which involved a rigger hired on a project-to-project basis, whose engagement was renewed 44 times, spanning 13 years of service. The Court found that the employer had failed to submit termination reports and considered the successive re-hiring of the employee as evidence that his tasks were usually necessary or desirable to the usual trade or business of the employer. Most importantly, the Court upheld the validity of fixed-term employment, provided the parties had dealt on equal terms, but imposed a caveat "where from the circumstances it is apparent that periods have been imposed to preclude the acquisition of tenurial security by the employee, they should be struck down as contrary to public policy, morals, good custom or public order." Thus, his status ripened into regular employment while initially engaged as a project employee. This doctrine was reiterated in Salinas v. NLRC (G.R. No. 114671, 24 November 1999), where, while the workers were hired for several projects over 5-10 years, the Court observed that the periods were imposed to undermine tenurial security and that the gaps between the project contracts spanned only a day or so.

However, there is a sub-strand of jurisprudence where the project employee was deemed never to have acquired regular status. The case of William Uy Construction Corp. v. Trinidad (G.R. No. 183250, 10 March 2010) is in point. While finding that the company had repeatedly hired the worker for around 35 projects that spanned around 16 years, the Court pointed out that the worker was contracted for specific projects, the durations of which were clearly outlined in his contracts. The Court emphasized that in the construction industry, obtaining projects is not a matter of course, and companies have no control over the decisions and resources of project proponents, length of service would not serve as a fair yardstick in determining the nature of employment.

To sum up, as long as the employee was truly engaged as project-based, and between each successive project, the employer made no manifestations of any intent to treat the worker as a continuing resource for the main business, then the project-based construction worker remains as such. (To be continued)

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For more of Dean Nilo Divina’s legal tidbits, please visit www.divinalaw.com. For comments and questions, please send an email to cabdo@divinalaw.com.