Classification of employment

“The employment status of a person is defined and

prescribed by law and not by what the parties say it
should be. Equally important to consider is that a contract
of employment is impressed with public interest such that
labor contracts must yield to the common good. Thus,
provisions of applicable statutes are deemed written into
the contract, and the parties are never at liberty to insulate
themselves and their relationships from the impact of labor
laws and regulations by simply entering into contracts with
each other.” (Innodata Knowledge Services vs. Inting, et al.,
G.R. No. 211892, 06 December 2017)
 Article 295 of the Labor Code
“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.”
 Article 296 of the Labor Code
“Probationary employment. Probationary employment shall
not exceed six (6) months from the date the employee
started working, unless it is covered by an apprenticeship
agreement stipulating a longer period. The services of an
employee who has been engaged on a probationary basis
may be terminated for a just cause or when he fails to
qualify as a regular employee in accordance with reasonable
standards made known by the employer to the employee at
the time of his engagement. An employee who is allowed to
work after a probationary period shall be considered a
regular employee.
 Classifications of employment

Based on Articles 295 and 296 of the Labor Code:

• Regular employment
• Casual employment
• Project employment
• Seasonal employment
• Probationary employment

Additional classification based on jurisprudence:

• Fixed-term employment
 Regular employment
Notwithstanding any written or oral agreement between the
employer and the employee to the contrary, there is regular
employment when:
• The employee has been engaged to perform activities that are
usually necessary or desirable in the usual business or trade of
the employer;
• The employee has rendered at least one year of service,
whether such service is continuous or broken, with respect to
the activity in which he is employed and his employment shall
continue while such activity exists; and
• The employee is allowed to work after the probationary period
 Project employment
• Two requirements to be a project employment (LC 295)
1. Designation of a specific project or undertaking for which the
employee is hired; and
2. Clear determination of the completion or termination of the
project at the time of the employee’s engagement.
• The services of the project employees are legally and
automatically terminated upon the end or completion of
the project as the employee’s services are coterminous
with the project. (Universal Robina Sugar Milling
Corporation vs. Acibo, G.R. No. 186439, 15 January 2014)
 Project employment
A “project” can either be:
• A particular job or undertaking that is within the regular or usual
business of the employer company but which is distinct and separate
and identifiable as such from the other undertakings of the company.
• Such job or undertaking begins and ends at determined or determinable
times.
• Ex. Construction company carrying out two or more identifiable construction
projects.

• A particular job or undertaking that is not within the regular business

of the corporation.
• Such a job or undertaking should also be identifiably separate and distinct
from the ordinary or regular business of the corporation.
 Seasonal employment
• Two requirements to be a seasonal employment:

1.The employee must be performing work or services that are seasonal in nature; and
2.That the employee had been employed for the duration of the season.

• “[W]hen the “seasonal” workers are continuously and repeatedly hired to perform the
same tasks or activities for several seasons or even after the cessation of the season,
this length of time may likewise serve as badge of regular employment. In fact, even
though denominated as “seasonal workers,” if these workers are called to work from
time to time and are only temporarily laid off during the off-season, the law does not
consider them separated from the service during the off-season period. The law simply
considers these seasonal workers on leave until re-employed. (Universal Robina Sugar
Milling Corporation vs. Acibo, G.R. No. 186439, 15 January 2014)

• This rule does not apply when seasonal employees are not hired regularly and
repeatedly for the same phase thereof. (Mercado vs. NLRC, September 5, 1991)
 Fixed-term employment
• A contract of employment for a definite period.

• Two requirements for fixed-term employment:

1.The fixed period of employment was knowingly and voluntarily
agreed upon by the parties, without any force, duress or improper
pressure being brought to bear upon the employee and absent
any other circumstances vitiating the employee’s consent; or
2.It satisfactorily appears that the employer and employee dealt
with each other on more or less equal terms with no moral
dominance whatever being exercised by the former on the latter.
(Brent School, Inc. vs. Zamora, et al., G.R. No. 48494, February 5, 1990; Pantranco North Express, Inc. vs. NLRC, December 16,
1994; Risonar vs. Cor Jesu College, G.R. No. 198350, 14 September 2016)
 Fixed-term employment
• Even if the employee performs functions that are
necessary or desirable in the usual business of an
employer, the employer and the employee are not
forbidden from agreeing on a period of time for
the performance for such activities.

• But the extension or successive renewals of fixed-

period contracts indicates that the employment is
regular and not just for a fixed-term.
 Casual employment
• That which is not in the nature of regular, project
or seasonal employment

• There is casual employment where an employee is

engaged to perform a job, work or service which is
merely incidental to the business of the employer.

• Casual employees, however, by operation of law

become regular employees one (1) year after their
employment as such.
 Probationary employment
• Where the employee is on trial by an employer
during which the employer determines the
qualification of the employee for regular
employment
Article 296 of the Labor Code specifically provides
that probationary employment must not exceed six
(6) months from the date the employee started
working. An employee allowed to work after the six
month probationary period shall be considered a
regular employee.
 Probationary employment
• In all cases of probationary employment, the standards for regularization
must be made known to employee at the time of his engagement. Where
no standards are made known to the employee, he should be deemed a
regular employee.

• Probationary employees may only be terminated for just or authorized

causes (as provided under Articles 297 to 299 of the Labor Code) or when
said probationary employee fails to qualify as a regular employee in
accordance with reasonable standards made known to the employee at the
time of his engagement.
FAQs about classification of employment

Can the company enter into fixed-term employment contracts with its employees?
Can the company just renew/re-hire the employee under a fixed term contract upon the
expiration of the first fixed term contract?

In a fixed-period or fixed-term employment, it is agreed that at a day certain, the

employment relationship shall cease, regardless of the nature of the work.

However, if the contract is renewed and/or the employee is re-hired on the basis
of the fixed period employment, this becomes an indication that the employee is actually
regular and is thus entitled to security of tenure. The practice of repeated re-hiring of
employees using fixed-period employment contracts may be construed as a mere subterfuge
by the employer to prevent his/her employees from becoming regular employees.
 FAQs about classification of employment

Can we terminate the probationary employment of an employee on the sole ground of

unsatisfactory performance?

If the performance of the employee during the probationary period was

“unsatisfactory” or if the employee failed to comply with the “reasonable standards” for his
position set by the employer, then the employer may terminate the probationary employee.

Imperative then in cases of probationary employment is the existence of reasonable

standards to be used by an employer to evaluate an employee which standards were made
known to the employee at the time he was engaged as a probationary employee.
FAQs about classification of employment

Can the evaluation of an employee’s direct superior be sufficient basis for determining his
suitability for regularization or termination?

As long as the evaluation by the employer or his representatives,

in this case the probationary employee’s direct superior, were based on
the standards set for the position of the probationary employee, which
standards were made known to the employee at the time of the
employment, then said evaluation may be used as basis to determine
whether a probationary employee is suitable for regular employment.