Computing Tenure from Project to Regular Employment in the Philippines
A comprehensive legal guide for HR practitioners, counsel, and workers
1. Why This Matters
Project-based hiring is common in construction, IT, BPO, entertainment, and other sectors where work is organized around deliverables. The moment a project worker “ripens” into a regular employee, an entirely new universe of rights opens: security of tenure, due-process termination standards, retirement eligibility, service incentive leave, and more. Miscomputing tenure exposes employers to illegal-dismissal liabilities running into millions of pesos.
2. Core Legal Sources
| Legal Source | Key Content |
|---|---|
| 1987 Constitution, Art. XIII §3 | Security of tenure is guaranteed to all employees. |
| Labor Code (P.D. 442) Art. 295 (formerly 280) | Defines project and regular employment. |
| Labor Code Art. 294 (formerly 279) | Enumerates regular employees’ right to be dismissed only for a just or authorized cause and with due process. |
| Labor Code Art. 302 (formerly 287) & R.A. 7641 | Sets 5-year minimum service for retirement pay. |
| D.O.L.E. Dept. Order No. 19-93 | Construction-industry rules: indicators of project status, DOLE termination reporting, rehiring rules. |
| D.O.L.E. Labor Advisory No. 13-11 (and subsequent advisories) | Apply the same tests to non-construction industries. |
| Supreme Court Jurisprudence | Interprets how and when a project worker becomes regular (see §5). |
3. Project Employment Essentials
- Specific undertaking – The job is tied to a distinct project or phase.
- Determinable completion – The approximate completion date is known at hiring time.
- Written contract – Must explicitly state (a) the project; (b) the expected duration; (c) that employment ends upon completion.
- DOLE termination report – Within 30 days after project completion (D.O. 19-93, s. 7).
- No on-going necessity – The job should not be intrinsically necessary or desirable to the company’s usual trade.
Effect of non-compliance: Failure to meet any of the above usually leads the courts to declare the worker regular ab initio (from day one), not merely upon project completion.
4. Regular Employment Explained
Under Art. 295, an employee is regular if:
- Their work is usually necessary or desirable in the employer’s usual business or
- They have rendered at least 1 year of service, continuous or broken, with respect to the activity in which they are employed.
Consequence: Regular employees enjoy security of tenure; dismissal is valid only for just or authorized cause and with observance of the twin-notice and hearing requirements.
5. How Project Workers Become Regular
Philippine jurisprudence outlines four overlapping tests:
| Test | Leading Cases & Principles |
|---|---|
| Length-of-Service / Rehiring Rule | Maraguinot v. NLRC (G.R. 120969, 1998): Successive re-engagement on similar work for several projects proves necessity of the work. |
| Necessity–Desirability Test | Universal Robina v. Catapang (G.R. 196343, 2014): Even with a project label, work that is integral to usual operations creates regular status. |
| DOLE-Report Test | Hanjin Heavy Industries v. Ibon (G.R. 170181, 2010): Employer’s failure to file project completion reports is a badge of regular employment. |
| Notice/Oversight Test | De La Salle Araneta v. Bernardo (G.R. 190809, 2017): Lack of clear notice to the worker that he is a project employee counts against the employer. |
Combined Rule of Thumb: If a worker is repeatedly rehired on the same trade, without genuine project intervals, and no DOLE reports are filed, courts will credit all prior service and deem the status regular since first hiring.
6. Computing Tenure Once Regularization Occurs
6.1 Start Date
- Default: Date of first engagement for the same employer on tasks that later mature into regular work.
- Construction “standby” gaps: Minor gaps (e.g., < 6 months) between phases do not necessarily break tenure if rehiring is pre-arranged or customary (D.O. 19-93, s. 6).
6.2 What Counts Toward Continuous Service
| Item | Counts? | Rationale |
|---|---|---|
| Service in earlier projects for same employer | Yes | Aggregated if work is similar and rehiring is successive. |
| Authorized-cause suspension/floating ≤ 6 months | Yes | Art. 301 (formerly 286) on bona-fide suspension. |
| Approved leaves (SIL, parental, etc.) | Yes | Treated as paid/creditable days. |
| Gaps initiated by worker (voluntary resignation, no-show) | No | Tenure is broken; later rehiring restarts the clock. |
6.3 Monetary Benefits Affected by Tenure
| Benefit | Statutory Basis | Tenure Computation |
|---|---|---|
| Retirement Pay | Art. 302 & R.A. 7641 | ≥ 5 years of aggregated service. Average Daily Wage × 22.5 days × years of service. |
| Separation Pay (authorized causes) | Art. 298 (formerly 283) | ½- or 1-month salary per year of service, counting fractions ≥ 6 months as 1 year. |
| Backwages (if illegally dismissed) | Art. 294 | From dismissal date up to actual reinstatement or finality of decision. |
| Service Incentive Leave | Art. 95 | After 1 year of service (whether project or regular). |
| 13th-Month Pay | P.D. 851 | 1/12 of total basic wages within a calendar year. |
Pro-tip for HR: Keep project-phase deployment logs and termination reports; otherwise, entire project history will likely be lumped into tenure.
7. Special Construction-Industry Rules (D.O. 19-93)
Employment Status Categories: Project, probationary, regular, seasonal, non-project regular.
Mandatory DOLE Field Office Reports:
- Notice of Project Commencement
- Notice of Termination for each worker at project completion
Standby vs. Off-Project: Workers placed on “off-project” status exceeding 6 months without redeployment acquire regular status and must either be recalled or paid separation pay.
Training/Skills Upgrading: Time spent in mandatory skills training is credited to tenure.
8. Employer Compliance Checklist
- Draft precise contracts—identify project, scope, duration, completion metrics.
- Provide written notice—explain project status, expected end, and benefit limitations.
- File DOLE reports—within 30 days after each termination.
- Pay statutory benefits while project status subsists (SSS, PhilHealth, Pag-IBIG, 13th month, SIL).
- Maintain deployment records—rehiring history, inter-project gaps, and completion dates.
- Observe due process—if terminating before project ends, treat it as just-cause or authorized-cause dismissal.
9. Remedies for Employees
| Remedy | Venue | Prescriptive Period |
|---|---|---|
| Illegal dismissal complaint | NLRC / RAB | 4 years |
| Money-claim (unpaid benefits) | NLRC / BWC | 3 years |
| Retaliatory dismissal (project worker turned regular) | NLRC + optional damages | 4 years |
| Unionization & CBA | NCMB | No fixed period before CBA filing window |
10. Practical Illustrations
Example A: Ana was hired 1 Jan 2018 for Project Alpha (18 months). Without break, she was re-engaged for Project Beta (24 months) and Gamma (30 months). No DOLE termination reports were filed. Result: Courts will treat her as regular from 1 Jan 2018. By 1 Jan 2023 she has 5 years’ tenure and may claim retirement benefits even if labeled a “project” worker.
Example B: Ben is a construction electrician hired 1 Feb 2024. Project ends 31 Dec 2024; DOLE termination report is filed. He is rehired only 1 Aug 2025. The seven-month gap exceeds the 6-month standby ceiling. On his return, he is hired as regular non-project and his previous 11 months are credited, giving him an entry tenure date of 1 Feb 2024.
11. Key Take-Aways
Project status is a temporary cloak—it can disappear retroactively if statutory and jurisprudential tests are not scrupulously met.
- For employers: Document; report; manage rehiring carefully.
- For workers: Keep every contract, payslip, and ID —they are tenure gold.
- For counsel/HR: When in doubt, compute tenure from first engagement; the Supreme Court usually does.
This article is for general information and is not a substitute for individualized legal advice. Philippine labor law evolves through new decisions and DOLE issuances; always verify the latest rules before acting.