by Obiter07
It is typical practice for corporations to engage “temps” or temporary employees. Sometimes, this is done over the long term, for periods exceeding 6 months, even extending up to 1 year. The engagement is then renewed after said periods. It may not be uncommon, but is such a practice legal?
Types of Employment
Article 280 of the Code classifies employees into regular, project, seasonal or casual employees. Only the first three (3) classifications are relevant to this discussion.
“ARTICLE 280. Regular and casual employment. — The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreements 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]
Activities Necessary Or Desirable
The Labor Code justifies the practice provided it’s under term/project employment. And the employees should not be performing functions “necessary and desirable” to the company’s usual business or trade. These “necessary and desirable” functions can serve to classify them as regular employees of the principal, regardless of any contractual stipulation to the contrary with the temps themselves or the agency through which they are sourced. In one case, a carpenter who was made to fill up and sign employment contracts for particular projects every 3 months, but did regular carpentry work each time for almost 2 years, was found to be a regular employee of a company engaged in the concrete structural business. MAGANTE vs. NLRC, et al. [G.R. No. 74969.
It should be noted that the courts have recognized the practice of “several government and private institutions and industries of hiring independent contractors to perform special services. These services range from janitorial, security and even technical or other specific services xxx. While these services may be considered directly related to the principal business of the employer, nevertheless, they are not necessary in the conduct of the principal business of the employer.” NERI et al, vs. NLRC, et al, [G.R. Nos. 97008-09. July 23, 1993.]
1 year of service, whether continuous or broken
The continuous service alone for a period of one (1) year with respect to one activity may result in regular employment with respect to the same. SAN MIGUEL CORPORATION vs. NATIONAL LABOR RELATIONS COMMISSION, et al. [G.R. No. 125606. October 7, 1998.]. The Supreme Court has also held that, term employment, while allowed, cannot serve to circumvent an employee’s right to security of tenure. PHILEX MINING CORPORATION vs. NATIONAL LABOR RELATIONS COMMISSION, et al. [G.R. No. 125132. August 10, 1999.] Hence, a painting and maintenance man was held to be a regular employee in a company which manufactures liquors where he performed such services continuously for a period of over 1 year. DE LEON vs. NLRC et al. [G.R. No. 70705. August 21, 1989.]
Regular Employment
In fine, a employee can be considered a regular employee if he (1) performs activities necessary and desirable in the usual trade or business of the employer or (2) has cumulatively rendered at least 1 year of service with respect to an activity and for so long as this activity exists, even if not necessary or desirable to the usual trade or business of the employer.
Labor Only Contracting, Consequences
Temps are usually sourced through what is termed “labor-only contracting” which is prohibited by law. It refers to an arrangement where a subcontractor merely recruits, supplies or places workers to perform a job, work or service for a principal and any of the following elements are present:
a) The contractor or subcontractor does not have substantial capital or investment which relates to the job, work or service to be performed and the employees recruited, supplied or placed by such contractor/subcontractor are performing activities which are directly related to the main business of the principal; or
b) The contractor or subcontractor does not exercise the right of control over the performance of the work of the contractual employee. (Section 5, D.O. 18-02)
In “labor-only” contracting, the person acting as contractor is considered merely an agent or intermediary of the employer who is responsible to the workers in the same manner and to the same extent as if they had been directly employed by him. Despite any agreement to the contrary, the law establishes an employer-employee relationship between the employer and the employees of the “labor-only” contractor to prevent any violation or circumvention of the provisions of the Labor Code, by holding both the employer and the “labor-only” contractor responsible to the employees. [Tiu vs. NLRC, supra, citing Broadway Motors, Inc. v. NLRC, 156 SCRA 522 (1987), further citing Philippine Bank of Communications v. NLRC, 146 SCRA 347 (1986)].
In one case, a messenger hired through an agency was held to be a regular employee of the principal bank when the court found that the agency was not a courier service but a recruitment agency. The court thus voided the contract which would have allowed the bank to avoid hiring regular employees by using an agency to provide them with employees to work for periods exceeding 1 year. PHILIPPINE BANK OF COMMUNICATIONS vs. NLRC, et al. [G.R. No. L-66598. December 19, 1986.]
Section 11 of DOLE Department Order No. 18-02 also requires the registration of contractors and subcontractors. Failure to register shall give rise to the presumption that the contractor is engaged in labor-only contracting. Only accredited contractors should thus be dealt with.
In the end, whatever employment practices they choose, employers must determine whether they risk claims for regular employment, benefits and damages which claims they may find neither necessary nor desirable.
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