Project Employment in Construction: Defining Scope and Tenure in the Philippines

Project Employment in Construction: Defining Scope and Tenure in the Philippines

Construction workers often spend years moving from one project to another for the same company. When the last project ends, can they claim they were regular employees entitled to security of tenure? In Bajaro v. Metro Stonerich Corp. (G.R. No. 227982, April 23, 2018), the Supreme Court settled this question, reaffirming that in the construction industry, repeated rehiring and years of service do not automatically convert a project employee into a regular one.

The Case: A Six-Year Concrete Pump Operator

Mario Bajaro worked as a concrete pump operator for Metro Stonerich Corporation, a construction firm, from June 2008 to May 2014. Over six years, he was assigned to five different construction projects, each lasting five to twelve months. He signed a Kasunduan Para sa Katungkulang Serbisyo (Pamproyekto) — a project employment contract — every time he was hired.

In April 2014, Bajaro injured his thigh while cleaning a concrete pipe. After recovering, he reported back to work but was told his services were no longer needed because the project had been completed. He filed a complaint for illegal dismissal, arguing that his six years of continuous service and his performance of tasks necessary to the company's business made him a regular employee.

The Issue: Regular or Project Employee?

The central question was whether Bajaro was a regular employee entitled to security of tenure, or a project employee whose employment lawfully ended upon project completion.

The Ruling: Project Employment Upheld

The Supreme Court ruled that Bajaro was a valid project employee. Under Article 294 of the Labor Code, employment is regular when the employee performs activities "usually necessary or desirable" to the employer's business — except when the employment is fixed for a specific project whose completion was determined at the time of hiring.

For project employment to be valid, the employer must prove two things: (1) the employee was hired for a specific project or undertaking, and (2) the employee was notified of the project's duration and scope at the time of engagement.

Metro Stonerich satisfied both requirements. Bajaro's contracts expressly stated he was a project employee, identified the specific project, and indicated the start date and completion target. The company also submitted an Establishment Employment Report to the Department of Labor and Employment, reporting Bajaro's termination due to project completion.

Why Length of Service Does Not Mean Regularization

The Court acknowledged that Bajaro worked for six years and performed work vital to the construction business. But it cited William Uy Construction Corp. v. Trinidad to explain why the usual rules do not apply to construction:

"This standard will not be fair, if applied to the construction industry, simply because construction firms cannot guarantee work and funding for its payrolls beyond the life of each project."

Construction companies depend on available projects over which they have no control. Requiring them to keep workers on payroll after project completion would be "extremely unfair to the employers and amounts to labor coddling at the expense of management." The Court also cited Caseres v. Universal Robina Sugar Milling Corporation for the rule that repeated rehiring does not qualify project employees as regular, since length of service is not the controlling factor.

Benefits Still Due to Project Employees

Being a project employee does not mean forfeiting statutory benefits. The Court affirmed Bajaro's entitlement to:

• Overtime pay differentials — 25% of his daily wage per hour of overtime under Article 87 of the Labor Code;
• Service incentive leave pay — five days with pay per year under Article 95;
• Proportionate 13th month pay for the period worked;
• Attorney's fees of 10% of the monetary award, since wages were unlawfully withheld.

All amounts earned legal interest of 6% per annum from finality of the decision.

Practical Takeaways

• Construction workers hired for specific projects with clear contracts are project employees, not regular employees, regardless of how long they stay with the company.
• Employers must prove two things to validly claim project employment: a specific project existed, and the worker was informed of its duration and scope at hiring.
• Repeated rehiring and years of service do not convert a project employee into a regular employee in the construction industry.
• Project employees still enjoy statutory benefits like overtime pay, service incentive leave, and 13th month pay.
• Employers should keep signed project contracts and submit reports to the DOLE to document project-based hiring.

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