Validity of project employments

Dear Atty. Kathy,

I am a new HR Associate in Company A. During an internal audit of the HR Department, one of the findings was

I did not submit an establishment termination report for one project involving a number of project employees. During the administrative investigation for such finding, I explained that the failure to file the report was inadvertent and due to the volume of my work and other reports I have to file with various government agencies; but that I was able to complete all other project employment documents of said employees, like the project employment contracts and the notice of termination of the project. I am worried because during the administrative hearing, I was told that the affected project employees might claim that they are regular employees and that their project employments are not valid due to the failure to file the establishment termination report. Is the filing of the establishment termination report indispensable to the validity of project employments?

Isla Dear Isla,

In the case of Toyo Seat Philippines Corporation, et al. vs Velasco, et al. (G.R. 240774, 3 March 2021), the Supreme Court ruled that submission of termination reports is only one of several indicators of project employment. The applicable Department of Labor and Employment (DoLE) Department Order 19, Series of 1993 (DO 19-1993), in fact, clearly states: that “(e)ither one or more of the following circumstances, among others, may be considered as indicators that an employee is a project employee” (Section 2.2). This is because the DoLE did not intend for DO 19-1993 to supplant the statutory requisites of a valid project employment provided in the Labor Code.

Thus, in determining the existence of a valid project employment, the essential test remains that laid down by Article 295 of the Labor Code, with the indicators in DO 19-1993 applying suppletorily.

Further, the Supreme Court also held in the case of Quebral, et al. vs Angbus Construction Inc., et al. (G.R. 221897, 7 November 2016) that based on Section 2.2 of DO 19-1993, it is clear that the submission of the termination report to the DoLE “may be considered” only as an indicator of project employment. By the provision’s tenor, the submission of this report, by and of itself, is therefore not conclusive to confirm the status of the terminated employees as project employees, especially where there is a glaring absence of evidence to prove that employees were assigned to carry out a specific project or undertaking, and that they were informed of the duration and scope of their project engagement, which is, in fact, attendant to the first two indicators of project employment in the same DoLE DO 19-1993.

Therefore, based on current jurisprudence, even if you failed to submit the establishment termination report, as long as there is substantial evidence on record to prove that the requisites of a valid project employment under Article 295 of the Labor Code were met, the affected project employees may still be considered as having been validly engaged as such project employees.

In your case, you mentioned that you completed other project employment documents, like the project employment contracts and the notice of termination of the project. If these documents prove that there is a specific project or undertaking, the completion or termination of which has been determined at the time of the engagement of the employee, and these were all communicated to the project employees, such may already be considered as indicators of project employment, even without the establishment termination report.