Project-based employment

Dear Atty. Vlad,

I own a construction company and started to hire project-based employees depending on the needs of clients. I hired 30 employees last year and their contracts expired in December 2021. This June 2022, a new project was awarded to me but I will only need 15 project-based employees. Will there be any consequence if I only choose 15 out of those 30 I previously engaged?



Dear Mark,

Your question can be answered by citing the decision 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):

(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 for 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 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 will be 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 a case, 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 with your concern based on what you have told me.

Atty. Vlad del Rosario

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