Is Renewing an Employment Contract Every Three Months Illegal in the Philippines?

(A comprehensive legal overview as of July 2025)

1. Constitutional & Statutory Framework

Source	Key Provision
1987 Constitution	Art. XIII §3 guarantees workers security of tenure—employment may not be terminated except for just or authorized cause and with due process.
Labor Code of the Philippines (Pres. Decree 442, as amended)	• Art. 295 [formerly 280] defines regular employment and the concept of “casual” work that becomes regular after 12 months. • Art. 296 [formerly 281] on probationary employment: maximum six (6) months, after which the employee becomes regular if allowed to continue working. • Art. 297–299 set the exclusive just and authorized causes for termination.
Department of Labor & Employment (DOLE) Department Order No. 174-17	Reinforces the prohibition on labor-only contracting and schemes that “short-term” employees to defeat regularization (“endo” or “5-5”).

2. Fixed-Term vs. Probationary Employment

Aspect	Probationary	Fixed-Term
Legal Basis	Art. 296 (probationary)	Jurisprudence-driven (not codified), starting with Brent School, Inc. v. Zamora (G.R. No. 48639, 05 Feb 1990)
Maximum Duration	6 months (unless apprenticeship longer by law)	No statutory cap, but duration must be “definite, agreed upon knowingly and voluntarily, and not designed to circumvent security of tenure.”
Effect of Renewal	Continued service beyond 6 mos. → employee is regular by operation of law	Successive renewals can be evidence that the arrangement is not genuinely fixed-term and that the employee is, in fact, regular

Key principle: Whether labeled “probationary,” “project,” or “fixed-term,” what matters is the totality of circumstances and the employer’s intent. Courts look behind contractual labels to protect security of tenure.

3. “Every-Three-Months” Renewals: Common Scenarios

Probationary “extensions” Typical pattern: 3-month contracts renewed twice. • Illegality: A probationary period longer than 6 months is void unless the job is covered by an apprenticeship agreement duly approved by DOLE. • Result: Employee becomes regular after 6 months; a subsequent non-renewal is tantamount to illegal dismissal unless for a just or authorized cause.
Nominal Fixed-Term Contracts Typical pattern: Renewable 3-month “project” or “consultancy” contracts for work that is actually necessary and desirable to the business. • Test: Under Brent, fixed-term is valid only if (a) the term was knowingly and voluntarily agreed upon without force or improper pressure, and (b) the employer and employee dealt on roughly equal terms. • Red ﬂags: Substitution of contracts shortly before regularization; identical duties as regular employees; a “roll-over” scheme practiced company-wide. • Effect: Courts often treat the employee as regular and declare subsequent non-renewals as illegal dismissal (Philippine Global Communications v. De Vera, G.R. No. 175271, 06 Jun 2011; GMA Network v. Pabriga, G.R. No. 176419, 23 Nov 2011).
Genuinely Time-Bound Projects/Seasonal Work • Short contracts are permissible (e.g., three-month TV mini-series, seasonal harvest) if the enterprise can prove the work is project-based or seasonal and the employee was rightly informed at engagement. • Renewal is allowed only if tied to a new, distinct project or season.

4. Supreme Court & NLRC Guidance

Case	Gist / Ratio
Brent School, Inc. v. Zamora (1990)	Recognized fixed-term employment as an exception—valid only if both parties dealt on equal footing and the term was the “decisive and paramount consideration.”
Pure Foods Corp. v. NLRC (G.R. No. 78591, 21 Mar 1989)	Employer cannot defeat regularization by repeatedly rehiring workers on short contracts for work necessary to its business.
Aberdeen Court v. Agustin (G.R. No. 149371, 13 Apr 2005)	Continuous rehiring on 5-month contracts showed intent to avoid regularization; employees were declared regular.
GMA Network v. Pabriga (2011)	Three-month writer contracts, renewed for years, were struck down; writers deemed regular.
PICOP Resources v. Dequilla (G.R. No. 172666, 05 Mar 2010)	Even professional/managerial employees can gain regular status despite fixed-term labels if the underlying work is indispensable to the business.

Take-away: Courts pierce through contractual forms that “camouflage” employment status.

5. DOLE Enforcement & “Endo” Crackdown

Department Order 174-17 (2017) voids labor-only contracting and “re-contracting” designed to circumvent security of tenure.
Labor Advisory No. 06-20 and subsequent advisories reiterate that employees performing core functions cannot be continuously hired on short-term deals.
Violations can result in:
1. Labor inspections and compliance orders;
2. Solidary liability of principal and contractor;
3. Payment of back wages, reinstatement, regularization;
4. Possible criminal sanctions for willful refusal to comply with reinstatement orders (Art. 304, Labor Code).

6. Practical Implications

For Employers

Assess real business need. Use fixed-term only for truly time-bound, project-based, or seasonal roles.
Document everything. A clear project description or seasonal calendar helps show “valid fixed-term.”
Avoid automatic renewals. Rolling 3-month extensions without real project changes invite legal trouble.
Observe due process. If ending a contract, ensure just or authorized cause or pay separation benefits when required.

For Employees

Track cumulative service. Six (6) months = presumptive regularization; 12 months casual work = regular for activity.
Keep copies of contracts & payslips. Useful evidence before NLRC.
File a complaint promptly (4-year prescriptive period for money claims; illegal dismissal must be filed within 4 years as well).
Watch for “contract-splitting.” Separate entities but same owners/operations may be deemed one employer under the single-enterprise or labor-only contracting doctrine.

7. Frequently Asked Questions

Question	Short Answer
Is a 3-month contract itself illegal?	No. Duration alone isn’t unlawful. Intent matters.
Can the employer renew twice to “finish” a 6-month probation?	Yes—but any extension beyond six months (save for apprenticeships) converts the employee into regular.
If I sign every new contract, does that waive my right to regularization?	No. Security of tenure is statutory; agreements that waive it are generally void.
Are government employees covered?	The rules above apply to private-sector employment. Government workers follow civil-service rules, though security of tenure is likewise protected.
Can parties “contract out” of DOLE inspection?	No. DOLE may inspect anytime; contracts cannot bar legitimate inspection.

8. Conclusion

Renewing an employment contract every three months is not automatically illegal, but the Philippine Constitution, Labor Code, DOLE regulations, and decades of Supreme Court jurisprudence treat serial short-term renewals with deep suspicion. Where the practice is used to dodge regularization or to undermine security of tenure, the arrangement is void and the worker is deemed a regular employee entitled to reinstatement, back wages, and all attendant benefits. Employers should reserve three-month contracts for truly finite engagements, while employees should assert their rights once the signs of “perpetual probation” appear.

This article is for legal education only and does not constitute legal advice. For real-world disputes, consult a Philippine labor lawyer or the nearest DOLE Regional Office.