Regular Employment Contract

A regular employment contract is an employment arrangement between an employer and a regular employee wherein the latter has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer.

Summary

▪ A regular employment contract is an employment arrangement between an employer and a regular employee wherein the latter has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer.

▪ There are those deemed regular employees due to the employer’s non-compliance with labor laws.

▪ Regular employees have no specific end to their employment unlike non-regular employees.

▪ Employees are presumed regular unless proven otherwise.

1. Concept

A regular employment contract is an employment arrangement between an employer and a regular employee wherein the latter has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer.

A regular employee is one who has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, as defined under the Labor Code. (Article 295, Labor Code; cf. Section 5, Rule I, Book VII, Omnibus Rules & Regulations of the Labor Code)

a. Legal basis

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. (Labor Code)

This provision classifies employees into regular, project, seasonal, and casual. It further classifies regular employees into two kinds: (1) those “engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer”; and (2) casual employees who have “rendered at least one year of service, whether such service is continuous or broken.” (Fuji Television Network, Inc. v. Espiritu, G.R. No. 204944-45, 03 December 2014)

NB: Fixed-term employment contract is recognized under jurisprudence starting with Brent School v. Zamora.

b. Requirements

There are no specific requirements for a regular employment contract to be valid.

For one, the employer may simply extend a regular employment contract to job applicant. If the offer of regular employment is accepted, then a regular employment contract is created.

On the other hand, if the employment status of an employee is unclear, the Labor Code definition of regular employment becomes important. If the employee performs activities which are usually necessary or desirable in the usual trade or business of the employer, then there is a strong indication that the employee may be a regular employment.

Further, non-regular employees (e.g. probationary, casual, project, seasonal, fixed-term) may be deemed as regular employees if the requirements for non-regular employment contracts are not complied. For example, a probationary employee who is made to work beyond the probation becomes a regular employee by operation of law.

c. Test for regular employment

1) Reasonable connection

Under the definition, the primary standard that determines regular employment is the reasonable connection between the particular activity performed by the employee and the usual business or trade of the employer; the emphasis is on the necessity or desirability of the employee’s activity. Thus, when the employee performs activities considered necessary and desirable to the overall business scheme of the employer, the law regards the employee as regular. (Universal Robina Sugar Milling Corporation v. Acibo, G.R. No. 186439, 15 January 2019)

The connection can be determined by considering the nature of work performed and its relation to the scheme of the particular business or trade in its entirety. Also, if the employee has been performing the job for at least a year, even if the performance is not continuous and merely intermittent, the law deems repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is considered regular, but only with respect to such activity and while such activity exists. (Abasolo v. NLRC, La Union Tobacco Redrying Corporation, G.R. No. 118475, 29 November 2000)

2. Engaged as a regular employee

As earlier discussed, an employer may exercise its management prerogative and offer a regular employment contract to a job applicant. For example, even if the job vacancy only calls for a seasonal employee, the employer may still exercise its discretion and instead offer regular employment to secure the services of an applicant who may be experienced and/or highly skilled.

3. Activities are usually necessary or desirable

The standard, supplied by the law itself, is whether the work undertaken is necessary or desirable in the usual business or trade of the employer, a fact that can be assessed by looking into the nature of the services rendered and its relation to the general scheme under which the business or trade is pursued in the usual course. It is distinguished from a specific undertaking that is divorced from the normal activities required in carrying on the particular business or trade. (Basan v. Coca-Cola Bottlers Philippines, G.R. No. 174365-66, 04 February 2015)

4. Deemed regular due to non-compliance of labor law

Deemed regular employees refer to non-regular employees whose status has been altered by operation of law due to their non-regular employment contract being non-compliant with labor laws and regulations.

These are some of the examples:

1) Probationary employees who have not been informed of the standards/criteria for regular employment on/before the first day of work;

2) Probationary employees who are required or allowed to continue work after the probationary period;

3) Casual employees whose employment exceeded 12 months – they are regular insofar as the position they hold;

4) Project employees who have been hired for a project which turns out to be non-existing;

5) Project employees who have been continuously rehired even after the cessation of a project and the task performed are vital, necessary, and indispensable to the usual business or trade of the employer;

6) Seasonal employees who are required or allowed to continue to work after the season;

7) Fixed-term employees whose consent was vitiated into employment or where it satisfactorily appears that the employer and employee did not deal with each other on more or less equal terms; and,

8) Learners who have rendered at least two months of service but has been dismissed without just cause.

5. Regular vs. Non-Regular

Regular employees have no specific end to their employment unlike non-regular employees.

On the other hand, non-regular employees include probationary, casual, project, seasonal, and fixed term. Their employment has a specific end. For probationary employees, it is the end of their probationary period wherein their employment either expires for failing to pass/qualify for regular employment or their employment continues for passing/qualifying for regular employment. For casual employees, their employment should not exceed 12 months. For project employees, their employment is co-terminus with the undertaking/project. For seasonal employees, their employment should not exceed beyond the season. For fixed term, their employment should not exceed the fixed term or period.

6. Presumption of regular employment

Regular employment is the default employment status unless proven otherwise by the employer. Otherwise stated, it is the employer who has the burden of proof that the employee is not a regular employee. This is done through showing of documentation, such as the employment contract.

7. Security of tenure

ART. 294. [279] Security of Tenure. In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. (Labor Code)

Based on the above-cited provision, regular employees enjoy security of tenure. Thus, they may only be dismissed from employment for just causes or separated from employment for authorized causes. If there is no just cause nor authorized cause, the employer may be held liable for illegal dismissal.

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

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

Department of Education’s Manual of Regulations for Private Schools

⦁ Cited Labor Law Jurisprudence (a.k.a. Supreme Court Decisions)

Disclaimer: All information is for educational and general information only. These should not be taken as professional legal advice or opinion. Please consult a competent lawyer to address your specific concerns. Any statements or opinions of the author are solely his own and do not reflect that of any organization he may be connected.

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