Dear Atty. Vlad,
I own a construction company and started to hire project-based employees depending on the need of the client for every project. I hired 25 employees last year whose contracts expired this December 2022. By January 2023, I will be starting a new project. However, since the project is a smaller one, I will only need 10 project-based employees. Will there be any consequence if I only choose 10 out of those 25 I have previously employed on a project basis? I hope you can help me.
Zandro
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Dear Zandro,
Under Philippine laws and decisions of the Supreme Court, project employment has been recognized.
The Supreme Court in the case of Isabelo Violeta, et al. vs National Labor Relations Commission, et al., (G.R. 119523, 10 October 1997) stated, as follows:
"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."
In addition, 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):
(a) The duration of the specific/identified undertaking for which the worker is engaged is reasonably determinable.
(b) 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.
(c) The work/service performed by the employee is in connection with the particular project/undertaking for which he is engaged.
(d) The employee, while not employed and waiting engagement, is free to offer his services to any other employer.
(e) 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 form on employees' terminations/dismissals/suspensions.
(f) An undertaking in the employment contract by the employer to pay a 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 a completion bonus, the employee may be considered a non-project employee (Section 3.4 (a), D.O. 19-93).
Hence, so long as you follow the guidelines provided above, even if you will not be able to hire your other employees in your last project which will end this December 2022, they cannot claim illegal dismissal. Their employment will end this December 2022. Insofar as your new employees are concerned, it is a fresh start for them and their employment will end again upon the completion of your next project.
On the other hand, if you will not follow the guidelines provided for by law, or, when you assign your employees simultaneously to different projects, this will destroy the nature of their being project employees. In such a case, they will now become members of the work pool entitled to security of tenure. This means that their employment may not be terminated 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