Understanding Project Employment: When Can Your Job End?

In the Philippines, many workers are hired for specific projects, leading to questions about job security and employee rights. This Supreme Court case clarifies the crucial distinction between project employees and regular employees, and the implications for job security and the right to strike. Understanding this difference is vital for both employers and employees to navigate labor laws effectively and ensure fair treatment in project-based work environments.

[ G.R. No. 170351, March 30, 2011 ]

INTRODUCTION

Imagine construction workers building a condominium. Their contracts specify they’re hired for ‘Project One,’ and upon completion, their jobs end. Is this legal? Can these workers form a union and demand regular employment status? This scenario highlights a common labor issue in the Philippines: the distinction between project employees and regular employees. The case of Leyte Geothermal Power Progressive Employees Union vs. Philippine National Oil Company – Energy Development Corporation tackles this very issue, setting crucial precedents on project-based employment and workers’ rights.

This case revolves around employees of the Philippine National Oil Company – Energy Development Corporation (PNOC-EDC) hired for a geothermal power project. The employees, forming a union, claimed they were regular employees and protested their termination upon project completion. The central legal question was whether these workers were genuinely project employees, as the company claimed, or regular employees entitled to greater job security and the right to strike in protest of unfair labor practices.

LEGAL CONTEXT: REGULAR VS. PROJECT EMPLOYMENT IN THE PHILIPPINES

Philippine labor law, specifically Article 280 of the Labor Code, distinguishes between regular and project employment. This distinction is critical because it dictates the extent of an employee’s job security. Regular employees enjoy security of tenure, meaning they can only be terminated for just or authorized causes after due process. Project employees, on the other hand, are hired for a specific project, and their employment automatically ends upon project completion.

Article 280 of the Labor Code states:

“ART. 280. Regular and Casual Employment.– 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.”

This provision outlines that regular employment is presumed when the work is ‘necessary or desirable’ to the employer’s usual business, *unless* it’s for a specific project with a predetermined end. The Supreme Court in numerous cases has emphasized that the nature of employment is determined by law, not just by the employment contract. This is to protect workers from employers who might try to circumvent labor laws by labeling regular jobs as project-based.

However, project employment is a legitimate form of employment recognized under Philippine law. For an employment to be considered project-based, two key elements must be present: (1) the employee is hired for a specific project or undertaking; and (2) the duration or scope of the project is determined or determinable at the time of hiring. This means employers must clearly communicate the project’s nature and expected end date to the employee from the outset.

CASE BREAKDOWN: LEYTE GEOTHERMAL POWER PROGRESSIVE EMPLOYEES UNION VS. PNOC-EDC

The Leyte Geothermal Power Progressive Employees Union represented workers hired by PNOC-EDC for its Leyte Geothermal Power Project. These workers, primarily carpenters and masons, formed a union and sought recognition as the collective bargaining agent, demanding negotiation for better terms and conditions. When the project neared completion, PNOC-EDC served termination notices to union members, citing project completion as the reason.

The Union, believing the terminations were union-busting and an unfair labor practice, filed a Notice of Strike and staged a strike. The Secretary of Labor intervened, certifying the dispute to the National Labor Relations Commission (NLRC) for compulsory arbitration and ordering the workers back to work. Despite this order, the Union continued the strike. PNOC-EDC then filed a complaint for strike illegality and damages, and also sought cancellation of the Union’s registration.

The case proceeded through the following stages:

1. NLRC Decision (First Level): The NLRC ruled in favor of PNOC-EDC, declaring the workers as project employees, their termination valid due to project completion, and the strike illegal for failing to meet legal requirements. The NLRC stated, “A deeper examination also shows that [the individual members of petitioner Union] indeed signed and accepted the [employment contracts] freely and voluntarily… contracts of employment were read, comprehended, and voluntarily accepted by them.“
2. Court of Appeals (CA) Decision: The Union appealed to the Court of Appeals via a Petition for Certiorari, alleging grave abuse of discretion by the NLRC. The CA upheld the NLRC’s decision, affirming that the workers were project employees and the strike was illegal.
3. Supreme Court (SC) Decision: The Union further appealed to the Supreme Court, raising several questions, primarily challenging their classification as project employees and the legality of the strike.

The Supreme Court sided with the NLRC and CA. It reiterated the criteria for project employment, emphasizing that the workers signed contracts clearly stating their project-based nature and the specific project they were hired for. The Court stated, “Plainly, the litmus test to determine whether an individual is a project employee lies in setting a fixed period of employment involving a specific undertaking which completion or termination has been determined at the time of the particular employee’s engagement.” Since the workers’ contracts met this test, and substantial evidence supported the NLRC’s findings, the Supreme Court affirmed the lower courts’ decisions.

Regarding the strike, the Supreme Court found it illegal because the Union failed to comply with mandatory legal requirements for strikes, such as conducting a strike vote and observing the cooling-off period. The Court highlighted the Union’s admission of staging the strike on the same day they filed the Notice of Strike, violating procedural rules. Therefore, the dismissal of union officers who led the illegal strike was also deemed valid.

PRACTICAL IMPLICATIONS: WHAT THIS CASE MEANS FOR EMPLOYERS AND EMPLOYEES

This case reinforces the validity of project-based employment in the Philippines when implemented correctly. It provides clear guidelines for employers utilizing project-based contracts and highlights the responsibilities of unions and employees when engaging in labor disputes.

For Employers:

• Clearly Define Projects: Ensure that projects are specific undertakings with defined start and end dates or scopes. Contracts must explicitly state the project nature of the employment.
• Contract Clarity: Employment contracts must clearly state that the employment is project-based and linked to a specific project. Employees should understand the terms and conditions upon hiring.
• Proper Termination: Terminate project employees upon project completion. Ensure proper documentation of project completion as evidence for valid termination.

For Employees and Unions:

• Understand Contract Terms: Carefully review employment contracts to understand if you are hired as a project employee. Clarify any ambiguities with the employer.
• Strike Legality: Unions must strictly adhere to all legal requirements before staging a strike, including filing notices, conducting strike votes, and observing cooling-off periods. Illegal strikes can have severe consequences, including loss of employment for union leaders.
• Seek Legal Advice: If unsure about employment status or labor rights, seek advice from labor lawyers or the Department of Labor and Employment (DOLE).

Key Lessons

• Project Employment Validity: Project-based employment is legal in the Philippines if the project is specific and its duration is predetermined and clearly communicated.
• Contract Importance: Employment contracts are crucial. They should accurately reflect the nature of employment, whether regular or project-based.
• Strike Requirements: Strict compliance with legal procedures is mandatory for any strike to be considered legal in the Philippines.

FREQUENTLY ASKED QUESTIONS (FAQs)

Q: What is the main difference between a regular employee and a project employee?

A: Regular employees perform work that is usually necessary or desirable to the employer’s business and have security of tenure. Project employees are hired for a specific project, and their employment ends upon project completion.

Q: Can a project employee become a regular employee?

A: Generally, no, if the project employment is legitimately structured. However, if a project employee is continuously rehired for different projects without a break and their work becomes integral to the company’s regular business, they might be deemed a regular employee by law.

Q: What are the requirements for a legal strike in the Philippines?

A: For a strike to be legal, unions must file a notice of strike, conduct a strike vote with a majority of union members, and observe a cooling-off period (30 days for bargaining deadlocks, 15 days for unfair labor practices). Specific procedures are outlined in Article 263 of the Labor Code.

Q: What happens if a strike is declared illegal?

A: Employees participating in an illegal strike may face disciplinary actions, including dismissal. Union officers who knowingly participate in an illegal strike may lose their employment.

Q: If my contract says ‘project employee,’ am I automatically a project employee?

A: Not necessarily. The law looks at the actual nature of the work and the circumstances of employment, not just the contract’s label. If your work is actually regular and necessary for the business, despite being labeled ‘project employee,’ you might still be considered a regular employee.

Q: What should I do if I believe I am wrongly classified as a project employee?

A: Consult with a labor lawyer or reach out to the DOLE. They can assess your situation and advise you on your rights and legal options.

ASG Law specializes in Labor Law and Employment Disputes. Contact us or email hello@asglawpartners.com to schedule a consultation.