Project Employment Contract as Tested Against the Rules on Regular Employment

Project employment viz regular employment involves activities which may or may not be usually necessary or desirable in the usual business or trade of the employer, as we have discussed 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].

The Supreme Court (SC), in the case of GMA Network, Inc. vs. Pabriga, [G.R. No. 176419., November 27, 2013], it is evidently important to become clear about the meaning and scope of the term “project” in the present context.

The “project” for the carrying out of which “project employees” are hired would ordinarily have some relationship to the usual business of the employer.  Exceptionally, the “project” undertaking might not have an ordinary or normal relationship to the usual business of the employer.  In this latter case, the determination of the scope and parameters of the “project” becomes fairly easy.

According to the SC, it is unusual (but still conceivable) for a company to undertake a project which has absolutely no relationship to the usual business of the company; thus, for instance, it would be an unusual steel-making company which would undertake the breeding and production of fish or the cultivation of vegetables.

From the viewpoint, however, of the legal characterization problem here presented to the Court, there

should be no difficulty in designating the employees who are retained or hired for the purpose of undertaking fish culture or the production of vegetables as “project employees,” as distinguished from ordinary or “regular employees,” so long as the duration and scope of the project were determined or specified at the time of engagement of the “project employees.”

For, as is evident from the provisions of Article 295 of the Labor Code, quoted earlier, 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.

In the realm of business and industry, the SC noted that “project” could refer to one or the other of at least two (2) distinguishable types of activities.  Firstly, a project could refer to 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.  Such job or

undertaking begins and ends at determined or determinable times.

The typical example of this first type of project is a particular construction job or project of a construction company.  A construction company ordinarily carries out two or more [distinct] identifiable construction projects: e.g., a twenty-five-storey hotel in Makati; a residential condominium building in Baguio City; and a domestic air terminal in Iloilo City.  Employees who are hired for the carrying out of one of these separate projects, the scope and duration of which has been determined and made known to the employees at the time of employment, are properly treated as “project employees,” and their services may be lawfully terminated at completion of the project.

The term “project” could also refer to, secondly, a particular job or undertaking that is not within the regular business of the corporation.  Such a job or undertaking must also be identifiably separate and distinct from the ordinary or regular business operations of the employer.  The job or undertaking also begins and ends at determined or determinable times.

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, 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.

Brief examples of what may or may not be considered identifiably distinct from the business of the employer are in order.  In Philippine Long Distance Telephone Company vs. Ylagan, [537 Phil. 840 (2006)] the SC held that accounting duties were not shown as distinct, separate and identifiable from the usual undertakings of therein petitioner PLDT. Although essentially a telephone company, PLDT maintains its own accounting department to which respondent was assigned.  This was one of the reasons why the Court held that respondent in said case was not a project employee.

On the other hand, in San Miguel Corporation v. National Labor Relations Commission, [357 Phil. 954 (1998)] the employee was hired to repair furnaces, which are needed by San Miguel Corporation to manufacture glass, an integral component of its packaging and manufacturing business.

The SC, finding that he was a project employee, explained that San Miguel Corporation is not engaged in the business of repairing furnaces.  Although the activity was necessary to enable the company to continue manufacturing glass, the necessity for such repairs arose only when a particular furnace reached the end of its life or operating cycle.  The complainant therein was therefore considered a project employee.

See here the procedure to observe when the employee refuses to receive employer’s notice.

In addition, the company should send another copy by registered mail and keep the registry receipt for future reference.

Learn how to Validly Terminate Employee in the Philippines with this Tutorial Video of Atty. Elvin

Read more on procedural due process discussion by Atty. Elvin:

Read more on procedural due process by Atty. Villanueva:

Twin Requirements of Notice and Hearing

Procedural Due Process for Other Types of Employment

Notice to Explain: Contents and Requirements