It is one of the exceptions to the rule on regular employment under Article 295 which states that the provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season.

Thus:

“An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists.”

Casual employment is loosely referred to in business talk as “contractual.” This is not an accurate reference but the obvious intention of people calling it as such is to refer to temporary employment or “contractual.”

However, if the intention of hiring a casual is to obviate the regularization of employee, then it cannot be permitted by the Court. As held by the Supreme Court (SC), the Court cannot countenance this practice as to do so would effectively permit companies to avoid hiring permanent or regular employees by

simply hiring them on a temporary or casual basis, thereby violating the employees’ security of tenure relative to their jobs. (University of Santo Tomas [UST] vs. Samahang Manggagawa ng UST, April 24, 2017, G.R. No. 184262)

In a 1990 case, the complainants were cogon grass cutter who claim to be regular employees. The employer is engaged in the manufacturing of cultured milk. Thus, the SC held that the activity is not related to the business of the employer. The employment is not regular.

The cutting of the cogon grasses in the premises of its factory is hardly necessary or desirable in the usual business of the private respondents. Indeed, it is alien thereto. (Capule vs. NLRC, G.R. No. 90653, November 12, 1990)

It is vital at this point that the contract for casual employment should comply with the requisites to be a valid casual contract. Otherwise, the presumption is that the employee is regular. (See Omni Hauling Services, Inc. v. Bon, 742 Phil 335, 344-345 (2014), and Basan v. Coca-Cola Bottlers Philippines, 753 Phil 74, 90-91 (2015).)

Just like all other employees, a casual employee may be terminated for just cause and authorized cause. A special case for termination of this employment is when the reason for hiring ceases to continue and such activity ceases to exist.

However, it is still better to indicate the duration of the cessation of such activity, and to have a good practice of limiting the activity to at most five (5) months only.

Below is an incomplete sample template for Casual Employment for Daily Paid Employee, just to provide an idea of salient provisions to include (View the description and contents of the full version of the Casual Employment Contract here)

The establishment and implementation of criteria are important feature of redundancy to give respect to the employee’s constitutionally enshrined security of tenure.

In one case, the Supreme Court has refused to give credence to the redundancy invoked by the employer inasmuch as the company adopted no criterion in dismissing the employee.

Verily, the absence of criteria and the erroneous implementation of the criterion selected, both render invalid the redundancy because both have the ultimate effect of

In a case, studies for the redundancy program showed to eliminate the “undesirables,” “abusers,” and “worst performers.” It was challenged for being indicia of bad faith. The Supreme Court disagreed and did not put significance to the allusions. It may be argued that the elimination of the so-called “undesirables” was merely incidental to the redundancy program or that past transgressions could have been part of the criteria in determining who among the redundant employees is to be dismissed.

That no other person was holding the same position prior to the termination of one’s services, does not show that his position had not become redundant. Indeed, in any well-organized business enterprise, it would be surprising to find duplication of work and two (2) or more people doing the work of one person.

The fact that the employer hired contractual employees after implementing its redundancy program does not necessarily negate the existence of redundancy. Especially if there is showing that such hiring was intended solely for winding up operations using the old system.

The employer has the recognized right and prerogative to select the persons to be hired and to designate the work as well as the employee or employees to perform it.

This includes the right of the company to determine the employees to be retained or discharged and who among the applicants are qualified and competent for a vacant position. The rationale for this principle is that the employer is in the best position to ascertain what is proper for the advancement of its interest.

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

In a case, the company brought in its plant high- speed machines to be used in the manufacture of its beer.

affected by the introduction of such machines. Disgruntled employees challenged their dismissal. But the Supreme Court ruled that the installation of labor-saving devices by the company at its plant was a proper ground for terminating employment.

The termination of employment of the affected employees due to the introduction of machinery in the manufacture of its products for purposes of effecting more economy and efficiency was declared valid.

Companies may yield to faster production system and higher efficiency methods. Unfortunately, the usual effect of new technology is the displacement of employees. Yet, our laws recognize this situation as long as there is not bad faith on the part of the employer.

In fact, the law authorizes an employer to terminate the employment of any employee due to the installation of labor saving devices. The installation of these devices is a management prerogative, and the courts will not interfere with its exercise in the absence of abuse of discretion, arbitrariness, or maliciousness on the part of management.

While the law acknowledges the management prerogative of closing the business, it does not, however, allow the business establishment to disregard the requirements of the law.

Thus, to validly invoke installation of labor-saving devices as ground for termination, the following requisites must concur:

1. The introduction of the machinery, equipment or other devices must be done in good faith;
2. The purpose for such introduction must be valid, such as to save on cost, enhance efficiency and other justifiable economic reasons;
3. There is no other option available to the employer but the introduction of the machinery, equipment or device and the consequent termination of employment of those affected thereby;
4. The one (1) month prior written notice requirement under Article 283 should be complied with;
5. There should be reasonable and fair standards or criteria in selecting who to terminate such as nature of work, status of the employees (whether casual, temporary or regular), experience, efficiency rating and seniority, among other considerations; and
6. Separation pay must be paid to the affected employees in such amount equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is high- er, a fraction of at least six (6) months shall be considered as one (1) whole year. In case the CBA or company policy provides for a higher separation pay, the same must be followed in- stead of the one provided in Article 283 (now Art. 298).

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

Project employees, generally, cannot be dismissed, prior to the completion of the project or a phase thereof. Fixed- term employee cannot be terminated prior to the end of the term stipulated by the parties.

Seasonal employees cannot be dismissed before the end of the season. Casual employees cannot be terminated before the end of the contracted unrelated work.

Hence, even dismissal of probationary employees requires observance of due process. Probationary workers cannot be dismissed except for failure to qualify, just cause or authorized cause. In any of these cases, procedural due process required should likewise be observed to avoid payment of indemnity.

Thus, if the cause for dismissal is due to the failure to meet the standards of the employer, the probationary employee should be served a written notice within a reasonable time from the effective date of termination.

Can the employer argue that although it did not give notice to the employee the defect is cured by the consultation or conference?

In the case of Pepsi-cola Bottling Co., et al. vs. NLRC, et al., the Supreme Court ruled in the negative. According to the court, the consultations or conferences are not a substitute for the actual observance of notice and hearing.

Likewise, preventive suspension and investigation do not replace the two-notice requirement of due process. Such defect cannot even be cured by the hearings conducted in the NLRC. The employer is mandated to furnish the employee sought to be dismissed two notices, the written charge, and the notice of dismissal, if, after hearing, dismissal is warranted.

Employer’s prior consultation with the labor union for the dismissal of an affiliated employee is not likewise sufficient compliance with the due process. Such consultation or consent is not a substitute for actual observance of those rights of the employee.

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

In a case where the company is organized (unionized) and the CBA provides for a union security clause, expulsion from the union still requires compliance with procedural due process before an employee can be dismissed by the company. Having security clause in the CBA ordinarily means an employee may be dismissed if he ceases to be affiliated with the union. There should be no automatic termination from the company upon expulsion from the union. The expelled member should be given a chance to explain his side.