HMO Benefit Entitlement of Project-Based Employees in the Philippines A Comprehensive Legal Guide (updated 26 June 2025)
1. Project-Based Employment at a Glance
| Core Rule | Quick Notes | |
|---|---|---|
| Statutory basis | Article 295 (renumbered, formerly Art. 280) of the Labor Code | Recognises “project or seasonal” work distinct from regular employment. |
| DOLE guidance | Department Order 19-93 (construction) & DO 174-17 (legitimate contracting) | Define completion-linked employment and documentation requirements. |
| Security of tenure | Ends upon “completion or cessation of the project” (not dismissal) | Continuous rehiring across projects may ripen into regular status. |
| Typical tenure | Weeks to several years; often tied to construction, IT-BPM campaigns, film/TV productions, special research grants, etc. |
2. Statutory Health Protection vs. HMO
| Layer | Mandatory? | Key Instrument | Coverage |
|---|---|---|---|
| Universal Health Care (PhilHealth) | Yes (employer shares premium). | Republic Act 11223; Sec. 15, Labor Code. | Hospitalisation & primary care nationwide. |
| Employee Compensation Commission (ECC) | Yes (separate monthly contribution). | PD 626 as amended. | Work-connected sickness, injury, death. |
| Occupational Safety & Health (OSH) | Yes. | RA 11058 (2018) + DO 198-18. | On-site medical & first-aid facilities. |
| Health Maintenance Organization (HMO) plan | No—purely contractual. | Governed by Insurance Code (Title 14) & DOH-Bureau of Quasi-Hospitals rules. | Private prepaid care for employees & dependents. |
Bottom line: Philippine law does not require employers—regular or project-based—to purchase an HMO. Entitlement must arise from contract, CBA, company policy, or established practice.
3. Sources of HMO Entitlement for Project-Based Workers
Employment Contract / Project Appointment
- Spell out the benefit, premium share, coverage period, and whether it survives project completion.
Company Policy / Employee Handbook
- If the handbook extends HMO to “all employees,” excluding project hires may invite equal-protection complaints (Art. 130, Labor Code).
Collective Bargaining Agreement (CBA)
- Project-based unions exist in film, construction, mining, etc. Once bargained, HMO is a demandable standard.
Company Practice Doctrine
- When an employer grants a benefit consistently and deliberately for a “long period” (usually ≥ 2 years) it ripens into a vested right (e.g., Davao-Mitsubishi vs. Secretary of Labor, G.R. 186404, 8 June 2016). Applies even to project employees rehired in successive projects.
Principal-Contractor Mandates (DO 174-17, Sec. 7)
- If a principal requires an HMO in the service agreement, the contractor must furnish it; liability is solidary.
4. Jurisprudence Touchstones
| Case | G.R. No. / Date | Take-away |
|---|---|---|
| Lopez Sugar Corp. v. FFW | G.R. L-75700, 30 Aug 1990 | Long-continued grants become part of wages. |
| Producers Bank v. NLRC | G.R. 80661, 11 Oct 1994 | Withdrawal of medical benefits void where established practice exists. |
| TAMSON’s Enterprises v. CA | G.R. 201930, 7 Feb 2018 | Project employees rehired continuously may claim parity of benefits. |
| Pacific Concrete v. NLRC | G.R. 197439, 12 Jan 2022 | In construction, HMO required by CBA binds even post-project. |
| Arvin Int’l vs. NLRC | G.R. 147248, 26 Apr 2005 | Fringe benefits are part of “wage” for illegal dismissal awards. |
5. Industry-Specific Notes
- Construction – DO 13-98 obliges medium/large sites to maintain on-site clinics; many principals bundle HMO to meet this requirement.
- IT-BPM – Project-based “campaign agents” often receive the same HMO as regulars because of PEZA/BSPI accreditation incentives.
- Film & TV – Unions (e.g., National Alliance of Broadcast Unions) typically negotiate per-shoot HMO or on-call medical teams.
- Government projects – For COS/JOs in state universities, the DBM Circular 2022-3 bars HMO funding unless sourced from project grant.
6. Tax Treatment (BIR Perspective, 2025 Update)
| Scenario | Fringe-Benefit Tax (FBT) | Employee WHT? |
|---|---|---|
| Employer-paid HMO for the employee alone | Exempt from FBT (RMC 50-2018). | None. |
| Portion attributable to dependents | Subject to 35 % FBT, paid by employer. | None. |
| Employee salary-deducted share | Deductible from taxable salary; no FBT. | Taxable income decreases. |
Bookkeeping hint: segregate premium for dependents to avoid inadvertent FBT exposure.
7. Common Pitfalls & Compliance Tips for Employers
- Mismatch between policy & practice – Issue: handbook limits HMO to regulars but HR enrolls project hires ad-hoc; establishes a practice.
- Lapse of coverage before project end – Always align policy year with the project timeline or obtain short-term riders.
- Transfer to next project without reenrollment – The “gap day” problem may trigger pre-existing condition exclusions.
- Termination disputes – If an HMO card states validity “until contract expiry,” ensure notice of termination coincides; delayed clearance can mean extended coverage at employer’s cost.
- Contracting/outsourcing – Principals should include an HMO clause in the Service Level Agreement and require proof of remittance.
8. Remedies for Employees
| Grievance | Forum | Prescriptive Period |
|---|---|---|
| Non-grant or withdrawal of HMO promised in contract/CBA | NLRC money claim / Unfair labor practice | 3 years (Art. 306). |
| Discrimination (regulars vs. project employees) | DOLE Regional Office or NLRC | 3 years. |
| Occupational health hazard without medical facilities | DOLE OSH Inspectorate | Continuous while violation exists. |
Employees may also invoke the Bautista principle: benefits unjustly withheld can be “reimbursed” in cash equivalent.
9. Frequently Asked Questions
If I work only 2 months on a project, can I demand an HMO? Only if your contract, policy, CBA, or proven practice grants it. Otherwise, PhilHealth covers you.
Does PhilHealth make HMO redundant? No. PhilHealth is cost-sharing “social insurance”; HMO offers quicker access, outpatient care, and higher room rates.
Can an employer stop providing HMO mid-project for cost-cutting? Only with employee or union consent, or if expressly reserved in the contract. Abrupt withdrawal after consistent grant is illegal diminution.
Is an HMO premium part of “basic wage” for 13th-month pay? No—benefits in kind are excluded (PD 851, Sec. 2). But they form part of wage in computing separation pay or backwages if withdrawn unlawfully.
Who pays FBT on HMO for dependents? The employer, not the employee. Premiums for dependents are a “fringe benefit” under Sec. 33, NIRC.
10. Checklist for Drafting a Project-Based Contract with HMO
- Identify plan type, provider, account number.
- State coverage period (e.g., “from date of hiring until completion of Project X or 31 Dec 2025, whichever first occurs”).
- Clarify dependents (spouse? child? limits).
- Allocate premium sharing (100 % employer; 80-20 split; etc.).
- Include portability clause if employee is rehired on next project.
- Reserve right to change provider with equal or better coverage.
- Affirm benefit survives occupational injury until full recovery.
- Tie into Service Level Agreement if a contractor is involved.
11. Conclusion
While Philippine law does not compel employers to furnish HMO coverage, a project-based employee can lawfully acquire the right to an HMO through any binding instrument or consistent practice. Employers who wish to remain competitive—and compliant with non-discrimination norms—routinely extend the same HMO enjoyed by regular staff to project hires, especially when projects last six months or more or involve hazardous sites. Conversely, employees should scrutinise their contracts, monitor consistency of company benefits, and invoke available remedies where entitlement is withheld.
This article is for educational purposes only and is not legal advice. For specific concerns, consult legal counsel or the Department of Labor and Employment.