Project vs Regular Employee: What Brahm Industries Teaches About Valid Dismissal

The distinction between a project employee and a regular employee is one of the most contested issues in Philippine labor law. Employers often classify workers as "project-based" to avoid the costs and obligations attached to regular employment. But as the Supreme Court made clear in Brahm Industries, Inc. v. National Labor Relations Commission (G.R. No. 118853, October 16, 1997), this classification cannot be used as a shield against the mandatory requirements of law. The case is a reminder that both the reason for dismissal and the manner of carrying it out must comply with the Labor Code, or the termination will be declared illegal.

The Facts of the Case

Roberto Durian and Jone Comendador were employed by Brahm Industries, Inc., a company engaged in manufacturing water purifiers and waste control devices. Durian worked as a laborer-welder for about five years, while Comendador served for nine years, eventually becoming a machine welder operator. Both claimed they were dismissed without just cause and without due process.

Brahm, on the other hand, argued that the workers were not regular employees but project employees hired on a per-project basis. It claimed that the two abandoned their jobs after being reprimanded for unfinished welding work and for failing to account for tools worth P10,000.00.

The Labor Arbiter ruled in favor of the workers, finding them illegally dismissed. The NLRC affirmed this decision, and Brahm elevated the case to the Supreme Court.

The Issue

The central question was whether Durian and Comendador were project employees who could be terminated upon completion of a project, or regular employees entitled to the full protection of the Labor Code. A related issue was whether their dismissal, even if for a valid cause, complied with the requirements of due process.

The Ruling: Regular Employment, Not Project-Based

The Supreme Court ruled in favor of the workers. Under the Labor Code, an employment is considered regular if the employee performs activities that are usually necessary or desirable to the employer's usual business or trade. The exception is when the employment is fixed for a specific project whose completion is determined at the time of engagement. The Court quoted Article 280 of the Labor Code in its decision, defining regular and casual employment, and noted that the provision applies regardless of any written or oral agreement to the contrary.

The Court found that the work performed by Durian and Comendador as welders was undoubtedly necessary and desirable to Brahm's business of manufacturing water purifiers. Without their services, the business would grind to a halt. Moreover, Brahm's practice of re-hiring the workers after every project, over a period of five to nine years, confirmed that they were, in fact, regular employees.

Crucially, the Court noted that Brahm failed to comply with Policy Instruction No. 20, which requires employers to report to the nearest employment office the termination of project employees upon completion of each project. This failure was considered proof that the workers were not project employees but regular ones.

The Court also emphasized that the burden of proving the validity of termination rests on the employer, as mandated by the Labor Code. Brahm presented only self-serving affidavits from its other employees, which the Court found inadequate.

Two Facets of Valid Dismissal

The Court reiterated that a valid dismissal has two facets: (1) the legality of the act of dismissal, meaning there must be a just cause under the Labor Code; and (2) the legality of the manner of dismissal, meaning the employer must observe due process.

Due process requires two written notices: first, a notice apprising the employee of the specific acts or omissions for which dismissal is sought; and second, a notice informing the employee of the employer's decision to dismiss. These requirements are mandatory. Non-compliance renders the dismissal void.

Brahm failed to provide the first notice to the workers' last known addresses. Even assuming the workers had abandoned their jobs, the dismissal would still be illegal for lack of due process. The Court also noted that the workers' filing of a complaint for illegal dismissal with a prayer for reinstatement clearly suggested they had no intention of abandoning their work.

Attorney's Fees

The Court upheld the award of attorney's fees, citing the Civil Code, which allows such awards when a claimant is compelled to litigate to protect his interests by reason of an unjustified act or omission of the other party. However, the Court agreed with the NLRC's reduction of the award from ten percent to five percent of the total monetary award, as the substantial portion of the award referred to back wages rather than withheld salaries.

Practical Takeaways

• Project employee status requires strict compliance. An employer claiming that a worker is project-based must show a fixed term tied to a specific project and must comply with Policy Instruction No. 20 by reporting terminations to the nearest employment office. Failure to do so may convert the worker into a regular employee.
• The nature of the work matters. If an employee performs tasks that are necessary or desirable to the employer's usual business, and the need for those tasks is recurring, the employee is likely a regular employee regardless of contractual labels.
• Due process is non-negotiable. Even with a just cause, an employer must provide two written notices: one specifying the grounds for dismissal and another communicating the decision to dismiss. Skipping either notice renders the dismissal illegal.
• The burden of proof is on the employer. In illegal dismissal cases, the employer must present clear and convincing evidence that the termination was for a valid cause and that due process was observed. Bare allegations, such as claims of abandonment, are insufficient.
• Repeated re-hiring is evidence of regular employment. A practice of re-hiring workers after every project, over several years, strongly indicates that the workers are regular employees, not project-based.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.