Casual Employment Contract

Summary

⦁ A casual employment contract is an employment arrangement between an employer and a casual employee wherein the latter performs work that is incidental to the business.

⦁ Casual employees are those who perform work that is incidental to the business of the employer.

⦁ The employment of casual employees should not exceed twelve (12) months.

⦁ Non-compliance of the requirements may result in the employee being reclassified as a regular employee.

⦁ Burden of proof is on the employer when a non-regular employment is challenged.

1. Legal basis

Labor Code
ART. 295. [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.
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. (Emphasis supplied.)

Universal Robina Sugar Milling Corporation v. Acibo, G.R. No. 186439, 15 January 2019:

• Casual employment, the third kind of employment arrangement, refers to any other employment arrangement that does not fall under any of the first two categories, i.e., regular or project/seasonal.

a. Concepts

Casual employment contract – refers to an employment contract wherein casual employees are engaged for a casual employment period not exceeding 12 months and such employees perform activities which are incidental, auxiliary, or augments the usual business or trade of the employer.

Casual employees – refers to employees who perform activities which are incidental, auxiliary, or augments the usual business or trade of the employer.

Casual employment period refers to the casual employment period not exceeding 12 months.

2. Requirements

The following are the requirements:

1) The employee must perform work which are incidental to the usual trade or business of the employer (in direct contrast to the work of a regular employee); and

2) The casual employment period should not exceed twelve (12) months.

(LABOR CODE, Article 295; Paragele v. GMA Network, Inc., G.R. No. 235315, July 13, 2020, Per Leonen, J.)

a. 1st requisite: Incidental work

Incidental work involves auxiliary or supplementary work.

Otherwise stated, activities involving incidental work are the direct opposite of work that is usually necessary or desirable in the usual business or trade of the employer. Whether one task involves incidental work can vary across various businesses and even similar businesses may have different ways of doing business. Thus, it is critical to carefully analyze the usual business or trade of the employer and identify what activities are usually necessary or desirable and what are only incidental/supplementary.

[C]asual employees [perform] work that is neither necessary nor desirable to the usual business and trade of the employer. (See Paragele v. GMA Network, Inc., G.R. No. 235315, July 13, 2020, Per Leonen, J.)

b. 2nd requisite: 12-month limitation

For the 2nd requisite, the casual employment period should not exceed 12 months.

Otherwise, ff the casual employment exceeds 12 months, then the employee shall be deemed a regular employee as a result of non-compliance with labor laws. The regular employment status is by operation of law and does not need any action, acknowledgment, or confirmation on the part of the employer. Further, the re-classification of a regular employee by labor law will retroact all the way back to Day 1 of work.

[Article 280][ provides that a casual employee can be considered as regular employee if said casual employee has rendered at least one year of service regardless of the fact that such service may be continuous or broken. Section 3, Rule V, Book II of the Implementing Rules and Regulations of the Labor Code clearly defines the term “at least one year of service” to mean service within 12 months, whether continuous or broken, reckoned from the date the employee started working, including authorized absences and paid regular holidays, unless the working days in the establishment as a matter of practice or policy, or that provided in the employment contract, is less than 12 months, in which case said period shall be considered one year.26 If the employee has been performing the job for at least one year, even if the performance is not continuous or merely intermittent, the law deems the repeated and continuing need for its performance as sufficient evidence of the necessity, if not indispensability, of that activity to the business of the employer.27 Applying the foregoing, respondent, who has performed actual stevedoring services for petitioners only for an accumulated period of 228.5 days does not fall under the classification of a casual turned regular employee after rendering at least one year of service, whether continuous or intermittent.

1) 12-month rule applies only to casual employees

From the plain language of the second paragraph of Article 295 of the Labor Code, it is clear that the requirement of rendering “at least one (1) year of service[,]” before an employee is deemed to have attained regular status, only applies to casual employees. An employee is regarded a casual employee if he or she was engaged to perform functions which are not necessary and desirable to the usual business and trade of the employer Thus, when one is engaged to perform functions which are necessary and desirable to the usual business and trade of the employer, engagement for a year-long duration is not a controlling consideration.  (Paragele v. GMA Network, Inc., G.R. No. 235315, July 13, 2020, Per Leonen, J.)

a) Inapplicable to project, seasonal, and fixed-term employees

It is clear from [Article 291 of the Labor Code] that there are two determinative factors for the existence of regular employment: the nature of the work performed by the employee and the length of service rendered. If it be found that an employee performs functions which are usually necessary or desirable in the employer’s usual business or trade, or if a casual employee has rendered at least one year of service, then the law considers that employee as a regular employee even if the employment agreement, whether written or oral, provides otherwise. However, this general rule does not apply if the worker was employed for a specific project or if the work or service performed is seasonal in nature. (Toyo Seat Philippines Corporation v. Velasco, G.R. No. 240774, March 03, 2021, Per Gaerlan, J.)

3. Test for casual employment

The principal test is that the employee should perform work that is only incidental to the usual trade or business of the employer employment and the employment should not exceed twelve (12) months.

a. Casual work, incidental to business of employer

Casual means “occasional, coming without regularity.” (Caro v. Rillaroza, G.R. No. L-9659, 30 September 1957)

Other similar cases may be cited to show that employment which is not regular but is merely occasional and incidental, which although related to and connected with the regular business of the owner or employer, nevertheless, is not within the usual course of trade, business, profession or occupation of said employer, is to be considered casual employment within the meaning of the Workman’s Compensation Law. (Ibid.)

The work is purely casual when it is not a part of the business of the employer’ complements and explains the term “purely casual.” (Del Rosario v. Del Rosario, En Banc, G.R. Nos. L-18995-96, 29 December 1962, citing Mansal v. P. P. Gocheco Lumber Co., L-8017, 30 April 1955)

In a sawmill, for example, if a power unit running the mill gets out of order and a mechanic would be considered as purely casual, because the reparation of the mill is not the actual work or business of the sawmill but the sawing of lumber. But the piling up of lumber is work directly connected with the business of a lumber yard. Lumber must be sorted and piled up in groups according to sizes to facilitate handling and sale. The piling up of lumber is, therefore, an ordinary part of the work in a lumber yard. (Ibid.)

1) Will it impair the business?

Although not an official legal test, one good rule of thumb is to ask this question: “If this role is removed, will it impair the operations of the business?”

If the answer is a strong no, then there is a very strong indication that the position may be held by a casual employee.

On the other hand, if there is some doubt or a strong yes is the answer, then there is a very high likelihood that the position cannot be held by a casual employee.

2) Not based on position or title

Whether an employee may be a casual or not – is not based on the position or title.

Thus, contrary to popular belief, giving the role/position/title to an employee as an “assistant” does not necessarily mean that the employee is a casual employee.

Rather, the focus should be on the activities that are being performed by the employee.

If an administrative assistant or a marketing assistant performs activities which are usually necessary or desirable in the usual business or trade of the employer, then they may NOT be causal employees — rather they might be regular employees.

4. Brent School v. Zamora principles, applicable

Brent School v. Zamora (1990) is the landmark case which acknowledged the validity of fixed-term employment contracts even fi they are not mentioned in the Labor Code. Over the years, the principles enunciated in this case have also been applied to casual employment contracts. The reason being is that casual employment contracts are by their very nature also a term employment contract. Meaning, casual employment contracts are subject to a fixed-term or period – which should not exceed 12 months.

5. Distinguished

The following are distinguished.

a. Casual employees v. Regular employees

 Casual employeesRegular employees
Requirements(1) Performs activities that are incidental to the usual business or trade of the employer; and (2) Casual employment period not to exceed 12 calendar months(1) Performs activities which are usually necessary or desirable in the usual business or trade of the employer; or (2) Deemed a regular employee by operation of law; or (3) Offered regular employment by the employer
ActivitiesPerforms activities that are incidental to the usual business or trade of the employerPerforms activities which are usually necessary or desirable in the usual business or trade of the employer
Employment expirationUntil end of casual employment period, which should not exceed 12 monthsNone.
Security of tenureYes, they have security of tenure. During and within the casual employment period, they may only be dismissed for just causes or authorized causes and after observance of due process. However, they may be let go after the expiration of their employment v via advance notice prior to the last day, without need for due process.Yes, they have security of tenure. They may only be dismissed for just causes or authorized causes and after observance of due process.

b. Casual employees v. Probationary employees

 Casual employeesProbationary employees
Requirements(1) Performs activities that are incidental to the usual business or trade of the employer; and (2) Casual employment period not to exceed 12 calendar months(1) Probationary period not exceeding 180 calendar days; and (2) Standards/criteria for regular employment made known on/before engagement or Day 1
ActivitiesPerforms activities that are incidental to the usual business or trade of the employerMay perform any activity
Employment expirationUntil end of casual employment period, which should not exceed 12 monthsUntil end of probation, unless they pass/qualify for regular employment
Security of tenureYes, they have security of tenure. During and within the casual employment period, they may only be dismissed for just causes or authorized causes and after observance of due process. However, they may be let go after the expiration of their employment v via advance notice prior to the last day, without need for due process.Yes, they have security of tenure. During and within the probationary period, they may only be dismissed for just causes or authorized causes and after observance of due process. However, they may be let go after the expiration of their employment v via advance notice prior to the last day, without need for due process.

c. Casual employees v. Project employees

 Casual employeesProject employees
Requirements(1) Performs activities that are incidental to the usual business or trade of the employer; and (2) Casual employment period not to exceed 12 calendar months(1) Engaged for a specific project or undertaking; and (2) Completion has been determined or is determinable
ActivitiesPerforms activities that are incidental to the usual business or trade of the employerMay perform any activity
Employment expirationUntil end of casual employment period, which should not exceed 12 monthsUntil end of probation, unless they pass/qualify for regular employment
Security of tenureYes, they have security of tenure. During and within the casual employment period, they may only be dismissed for just causes or authorized causes and after observance of due process. However, they may be let go after the expiration of their employment v via advance notice prior to the last day, without need for due process.Yes, they have security of tenure. During and within the probationary period, they may only be dismissed for just causes or authorized causes and after observance of due process. However, they may be let go after the expiration of their employment v via advance notice prior to the last day, without need for due process.

d. Casual employees v. Seasonal employees

 Casual employeesSeasonal employees
Requirements(1) Performs activities that are incidental to the usual business or trade of the employer; and (2) Casual employment period not to exceed 12 calendar months(1) Performs work/services that are seasonal in nature; and (2) Employed for duration of a season
ActivitiesPerforms activities that are incidental to the usual business or trade of the employerPerforms work/services that are seasonal in nature
Employment expirationUntil end of casual employment period, which should not exceed 12 monthsUntil end of the season
Security of tenureYes, they have security of tenure. During and within the casual employment period, they may only be dismissed for just causes or authorized causes and after observance of due process. However, they may be let go after the expiration of their employment v via advance notice prior to the last day, without need for due process.Yes, they have security of tenure. During and within the season, they may only be dismissed for just causes or authorized causes and after observance of due process. However, they may be let go after the expiration of their employment v via advance notice prior to the last day, without need for due process.

e. Casual employees v. Fixed-term employees

 Casual employeesFixed-term employees
Requirements(1) Performs activities that are incidental to the usual business or trade of the employer; and (2) Casual employment period not to exceed 12 calendar months(1) Voluntary agreement; and (2) Bargained on equal footing
ActivitiesPerforms activities that are incidental to the usual business or trade of the employerMay perform any activity
Employment expirationUntil end of casual employment period, which should not exceed 12 monthsUntil end of fixed-term, period, or duration
Security of tenureYes, they have security of tenure. During and within the casual employment period, they may only be dismissed for just causes or authorized causes and after observance of due process. However, they may be let go after the expiration of their employment v via advance notice prior to the last day, without need for due process.Yes, they have security of tenure. During and within the fixed-term, period or duration, they may only be dismissed for just causes or authorized causes and after observance of due process. However, they may be let go after the expiration of their employment v via advance notice prior to the last day, without need for due process.

6. Burden of proof on the employer

When the validity of the employment arrangement is challenged, the burden of proof is on the employer.

7. When in doubt, interpreted in favor of the employee

“In case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living for the laborer.” (Article 1702, Civil Code)

References

Book VI, Presidential Decree No. 442, a.k.a. Labor Code of the Philippines

Book VI, Omnibus Rules Implementing the Labor Code

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