Validity of Renewed Short-Term Employment Contracts in the Philippines

“Security of tenure is a right guaranteed by the Constitution. Contractual arrangements—especially short-term ones—will be struck down whenever they are shown to be a mere device to defeat that right.” —Philippine Supreme Court, Brent School, Inc. v. Zamora (G.R. No. L-75289, 5 February 1990)

1. Framework of Philippine Employment Classifications

Source	Key Provisions
1987 Constitution	Art. XIII §3: State shall guarantee workers’ security of tenure.
Labor Code (PD 442, as renumbered)	Art. 294 [formerly 280] defines regular employment and recognizes project, seasonal, casual, and fixed-term engagements.
Civil Code (general contract law)	Art. 1306: Parties may stipulate terms “provided they are not contrary to law, morals, good customs, public order, or public policy.”

Short-term or fixed-term contracts fall under the fifth, catch-all category (“any other employer–employee arrangement”) contemplated by Art. 295. They are neither automatically illegal nor inherently favored. Their validity turns on intent and surrounding facts.

2. Foundational Jurisprudence

Brent School, Inc. v. Zamora (1990) Set the two-part “Brent test” for fixed-term employment:
1. Voluntariness – The worker knowingly consents to a contract with a definite period;
2. Good faith – The period was not imposed to circumvent security of tenure.
Serrano v. NLRC / GMA Network (2000) Struck down successive five-month contracts intended to avoid regularization.
Pure Foods Corp. v. NLRC (1997) & Universal Robina Sugar Milling v. Catapang (2008) Held that repeated renewals signal the necessity and desirability of the work, converting the status to regular.
Jaka Food Processing Corp. v. Pacot (2005) Ruled that even a valid fixed-term arrangement requires just or authorized cause—and due process—if employment is terminated before the lapse of the agreed period.
De La Salle University v. Bernardo (2017) Applied the Brent test to faculty on consecutive fixed-term contracts; ruled that length of service alone does not negate a truly term-based engagement when academic freedom and institutional practice justify it.

3. What Counts as a “Short-Term” Contract?

There is no statutory minimum or maximum; the term simply means employment for a definite, predetermined period. In practice:

Project/Seasonal: Period is linked to completion of a project or end of a season (Arts. 295-296).
Probationary: Up to 6 months under Art. 296; not strictly “fixed-term,” but sometimes confused with five-month contractual schemes (endo).
True Fixed-Term: Duration derives from the nature of the job (e.g., actors, athletes, “limited-run” campaigns).

4. The “Brent Test” Applied to Renewals

Requirement	Practical Indicators	Effect of Non-Compliance
Voluntariness	Employee signs each renewal with full understanding; no hidden conditions.	Contract may be voided; worker deemed regular.
Good Faith / Non-Circumvention	• Nature of work is time-bound • Employer can demonstrate operational reason (e.g., reliever, seasonal peak)	Repeated renewals for core functions → courts infer scheme to avoid tenure; employee becomes regular.

Rule of Thumb: The longer and more continuous the renewals, the weaker the employer’s good-faith defense.

5. Successive Renewals: When Do They Ripen into Regular Employment?

Necessity & Desirability Test (Art. 295): Work performed is necessary or desirable in the usual business → status is regular, regardless of contract wording.
“Substantial Continuity” Doctrine: Even with intermittent breaks, a pattern of rehiring for the same position is evidence of permanence (Mariscal v. Manila Pest Control, 2005).
Probationary Clock Avoidance: Re-hiring on five-month stints (“5-5-5” endo) is presumptively illegal (Serrano).

6. Effect of an Invalid Fixed-Term Renewal

Status: Employee is declared regular from first day of service.
Termination before end of last contract: Requires just cause (Art. 297) or authorized cause (Art. 298) plus procedural due process.
If dismissed without cause: Remedies are reinstatement with full backwages (Art. 294).
Expiration of term (if contract declared valid): Natural termination—no separation pay, unless stipulated or covered by CBA/company policy.

7. DOLE Rules & Compliance Tips

Issuance	Relevance
Department Order (DO) 174-17	Prohibits labor-only contracting; emphasizes genuine job-contracting & fixed-term legitimacy.
Labor Advisory No. 18-18	Clarifies employer burden to prove legality of fixed-term jobs.
Labor Advisory No. 10-21	Reminds employers that repeated renewals may be deemed regularization.

Best Practices for Employers

Document objective grounds (project timetable, seasonal peaks).
Specify standards & deliverables tied to period.
Observe cooling-off intervals only if genuinely dictated by operations.
Furnish DOLE-required reports for project/seasonal workers.

8. Practical Guidance for Workers

Keep copies of every contract and payslip—patterns matter.
Watch the calendar: Six months of cumulative service usually vests regular status unless legitimately project-based.
Assert rights early: File a complaint within four years (Civil Code prescriptive period for actions upon injury to rights).

9. Special Contexts

Education Sector: Fixed-term teaching contracts are allowed per academic freedom—but courts still scrutinize if renewals hide permanent needs (University of Santo Tomas v. Samahang Manggagawa, 2019).
Overseas Filipino Workers: Governed by POEA-standard contracts (maximum 12 months for sea-based; generally fixed-term by law).
Government Service: Civil Service Commission rules prevail, yet non-career/contract-of-service personnel still benefit from due-process guarantees in Gabriel v. CSC (2018).

10. Legislative Outlook

Numerous “Endo Abolition” bills have been filed (e.g., Senate Bills 137, 157, 172), seeking to limit renewals of fixed-term contracts to a total of 24 months, but none have become law as of 27 June 2025. Until then, jurisprudence and DOLE issuances remain the principal regulators.

11. Conclusion

A renewed short-term employment contract stands or falls on the twin pillars of voluntary agreement and good-faith necessity. Repeated extensions that mask an ongoing, indispensable role will almost always ripen into regular employment, with the full mantle of constitutional and statutory protection. Employers must tread carefully; workers should stay informed. Ultimately, the courts—and the Constitution—favor substance over form in preserving the Filipino worker’s right to security of tenure.

This article is for educational purposes only and does not constitute legal advice. For definitive counsel, consult a Philippine labor-law practitioner.