In Toyo Seat Philippines Corporation v. Annabelle C. Velasco, et al. (G.R. No. 240774, March 03, 2021), the Supreme Court reiterated that workers may be considered project employees regardless of the nature of the work they perform, as long as the essential elements of project employment are alleged and proven. These essential elements are: [a] that they were hired for a specific project or undertaking; and [b] the completion or termination of the project or undertaking for which they were hired has been determined at the time of their engagement.
The decision echoed the indicators of project employment, as provided in Department of Labor and Employment (“DOLE”) Department Order No. 19, series of 1993, as follows: [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 awaiting 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 DOLE 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; and [f] an undertaking in the employment contract by the employer to pay completion bonus to the project employee as practiced by most construction companies.
Discrete and Determinable Start and End Dates
In Toyo Seat, the employees were contracted to work for the manufacture of car seats for certain car models. The first project was the J68C project, which was completed ahead of the earlier estimated date because of low demand. The employees were then contracted to work on the second project, the J68N project, which was extended, because of fluctuations in demand for the new car model and the delayed arrival of the raw materials for the car seats. The J68C and J68N projects did not perfectly correspond to the periods set out in the employment contracts signed by employees but were either shortened or extended according to the economic forces of supply and demand.
At first glance, it may not have met the essential requisite that the completion or termination of the project should be determined at the time of engagement of the employee. However, there were other factual circumstances which indicated otherwise. First, the employment contracts clearly state that their employment is coterminous with the actual duration of the project; and as such, their engagement may be terminated at an earlier date if the project is finished ahead of schedule. Furthermore, the employment contracts clearly indicate that they are being engaged as project employees. Also, the Court of Appeals and the labor tribunals consistently found that the employees were not constrained, forced, or pressured to sign the project employment contracts. Second, in the project extensions, the employer had issued notices of extension to the employees concerned, wherein the new end dates of the project were clearly indicated.
The Supreme Court was convinced that the employer’s projects had discrete and determinable start and end dates which are nevertheless adjusted frequently due to several factors (such as consumer demand, arrival of raw materials, etc.). The completion of the projects were certain, even though the exact date thereof was dependent upon several economic factors.
Separate Contracts on Separate Projects
Another point that the Court made in Toyo Seat is the fact that the employer entered into separate contracts for the subsequent projects, taken together with the reference in said contracts to the previous project contract. This constitutes substantial evidence that the employees’ engagement in the subsequent project was a mere contingency measure meant to optimize manpower utilization. This was also made to allow respondents to continue working while the previous project remained idle. Moreover, the employer only resorted to simultaneous engagements when there was low volume of orders for a certain project.
The Supreme Court contrasted this with other instances when the project employment was being used to circumvent security of tenure either because workers were hired ostensibly as project employees but were assigned to non-project tasks and were regularly re-hired to the same position, or company projects without separate contracts and under different job descriptions.
Engagement for Specific Undertaking, Not Nature of Activity
The nature of the business of the employer, among others, also determines whether the employment is project-based or not. In Toyo Seat, the employer’s business model is based on “projects which are distinct, separate, and identifiable from each other.” Since it manufactures products on a project basis, consequently, it may hire project employees to cope with the demands of its current projects.
Indeed, the essence of the distinction between project and regular employment lies not in the nature of the activity performed, but in the engagement for a specific undertaking with a reasonably determinable time frame which is determined at the time of hiring and communicated to the employee.
For further information, please contact:
Ronald Mark C. Lleno, Partner, SyCip Salazar Hernandez & Gatmaitan