Project employees are not entitled to separation pay

Dear PAO,
I worked as a project base system engineer for two and a half years for an agency which deployed me to a company to which the former has a contract.

The contract of employer-agency will be terminated soon by the company where I am deployed. Because of that, my employer-agency decided to terminate my services even if I still have six months left in my contract. My question is, am I entitled to have a separation pay since my employment with my present employer-agency will soon terminate beyond my control or without my fault?
Regards,
Mr. UNIX

Dear Mr. UNIX,
The Labor Code defines the term project employees as:

“Art. 280. 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 period 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 services to be performed is seasonal in nature and the employment is for the duration of the season” (Emphasis supplied).

It is quite clear from your narration that your employment was for a specific period of time only corresponding to the completion of a certain project, as such, you are considered as a project employee. Project employees, due to the nature of their employment, are not entitled to separation pay for termination or separation from employment due to the completion of the project. Thus, “(t)he services of project employees are coterminous with the project. They may be terminated upon end or completion of that project or phase thereof for which they were hired.

The employer has no obligation to pay them separation pay” (C.A. Azucena, Everyone’s Labor Code, 2001 ed., p. 288).

However, a project employee still has the right to remain under employment for the entire duration of the project and may only be removed in the mean time for just or authorized cause.

The Supreme Court in the case of Archbuild Masters and Construction, Inc. and Joaquin C. Regala vs. NLRC and Rogelio Cayanga held that:

“…(I)f a project employee is dismissed his removal must still comply with the substantive and procedural requirements of due process. Sec. 3, Art. XIII, of the Constitution mandates that the State shall afford full protection to labor and declares that all workers shall be entitled to security of tenure. The fundamental guarantee of security of tenure and due process dictates that no worker shall be dismissed except for a just and authorized cause provided by law and after due process has been properly complied with. Therefore, a project employee hired for a specific task also enjoys security of tenure. A termination of his employment must be for a lawful cause and must be done in a manner which affords him the proper notice and hearing. Thus, a project employee must be duly furnished a written notice of his impending dismissal and must be given the opportunity to dispute the legality of his removal” (G.R. No. 108142, December 26, 1995).

Thus, if a project employee is removed before the completion of the project without any just or authorized cause therefor, then said project employee is considered to have been illegally dismissed.

It is worthy to note that separation pay is required to be given to an employee in cases of termination due to authorized causes provided for under Article 283 of the Labor Code of the Philippines, which states that:

“Art. 283. Closure of establishment and reduction of personnel. The employer may also terminate the employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year.”

As there was no mention of any of the causes aforementioned in your narration in connection with your severance as an employee, we assume that this is not the cause of your termination and as such, no separation pay may be demanded from your employer.

Be that as it may, however, you may file a complaint for illegal dismissal before the National Labor Relations Commission (NLRC) due to the fact that you were dismissed from work before the completion of the project without any apparent cause. In this case, you will be entitled to backwages and reinstatement, if still applicable, but not separation pay.

Again, we find it necessary to mention that this opinion is solely based on the facts you have narrated and our appreciation of the same. The opinion may vary when the facts are changed or elaborated.

We hope that we were able to enlighten you on the matter. –Persida Acosta, Manila Times

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to dearpao@manilatimes.net.