Many Filipino businesses—especially in construction, engineering, IT, and project-based services—depend on hiring workers for specific projects or phases. This approach makes sense: it keeps operations lean and manpower costs manageable.

But here’s a hard truth that catches many employers off guard: you might already be regularizing your project employees without realizing it.

Even with a contract that says “Project Employment,” certain practices—like rehiring workers without clear breaks, assigning them to general company tasks, or failing to specify project details—can legally turn them into regular employees.

Once that happens, you could face costly claims for illegal dismissal, reinstatement, backwages, and damages.

Let’s break down how this happens and what you can do to protect your business.

A Common Scenario: The Case of the “Reliable Foreman”

Take “AstraBuild Corp.,” a contractor growing fast. They hire Juan as a foreman for “Project Skyway Extension, Lot C.” His contract says “Project Employment.”

When Skyway ends after eight months, AstraBuild starts another project—“Coastal Road.” Since Juan is dependable, HR rehires him right away after a three-day gap. Later, he’s also asked to help with warehouse cleanup and equipment repairs between projects.

After three years, AstraBuild lets Juan go, believing his project contract has ended. But Juan files a case—and wins.

Why? Because the company’s pattern of continuous rehiring and general assignments showed that Juan’s work was not tied to a single project. The court ruled he was a regular employee, entitled to security of tenure.

This is a common—and avoidable—mistake.

What the Law Actually Says

Under Article 295 [formerly 280] of the Labor Code, an employee is project-based only if:

1. They were hired for a specific project or undertaking, and
2. The completion or termination of that project was determined and made known at the time of hiring.

But if the employee performs work that is usually necessary or desirable to your business—and is continuously or repeatedly rehired—the law treats them as a regular employee, regardless of what the contract says.

The Supreme Court has been consistent: the label in the contract doesn’t control. The actual nature of the work and the pattern of engagement do. (Carpio v. Modair Manila Co. Ltd., Inc., G.R. No. 239622, November 17, 2021; Santor v. Arlo Aluminum Co., Inc., G.R. No. 234691, February 19, 2020).

How Employers Accidentally Cause Regularization

Most cases of unintentional regularization come from simple oversights in three stages: hiring, deployment, and termination.

1. At Hiring: Vague Contracts

Many employers use generic “project employment” contracts that fail to specify:

• The exact project or phase the employee will work on;
• The expected duration or completion date; and
• The specific scope of work tied to that project.

If these details are missing, courts presume the job is regular, not project-based.

2. During Deployment: Rotations and Rehirings

Reassigning a project worker to another project, or letting them do company-wide tasks like maintenance or logistics, weakens the “project” nature of employment.

In Trimor v. Blokie Builders, G.R. No. 265553 (04 October 2023), the Supreme Court ruled that assigning project employees to general company work creates a strong presumption of regular employment.

Worse, continuous or repeated rehiring for the same kind of work without a substantial break is seen as proof that the job is essential and permanent.

3. At Termination: Lack of Proof of Completion

It’s not enough to say “the project is done.” You must prove it.
Courts require independent evidence such as:

• Certificates of project completion;
• Client acceptance reports; or
• Progress reports matching the employee’s assigned phase.

In Coogee International Inc. v. Maningo, G.R. No. 264881, 16 July 2025, the Court ruled that claiming project completion while continuing similar operations amounts to bad faith and illegal dismissal.

The Work Pool Misunderstanding

Some companies maintain a “work pool” of skilled workers they deploy from project to project. This is legal—but only if:

• Each engagement is time-bound and project-specific; and
• Workers are not continuously deployed or doing general work while “waiting” for a new project.

The Supreme Court in Maraguinot, Jr. v. NLRC, G.R. No. 120969, January 22, 1998, clarified that membership in a work pool doesn’t automatically make one a regular employee—but continuous, unbroken deployment does.

Post-Project Compliance: The Most Overlooked Step

When a project ends, employers must:

• Issue a written notice confirming project completion and the end of employment;
• Pay all earned wages and benefits, including pro-rated 13th month pay and unused SIL; and
• File a termination report with the DOLE within 30 days.

Failing to file this report is not automatically fatal, but it seriously weakens your legal defense. (Carpio v. Modair Manila, supra).

Remember: if you cannot prove that the job ended with the project, the law assumes it continues — and so does the employment.

Final Reminder: Compliance is Cheaper than Litigation

Unintentional regularization can cost millions in backwages and reinstatement orders. The good news? It’s preventable.

By maintaining contract specificity, deployment discipline, and complete documentation, you can legally engage project employees without risking regularization.

Don’t let a misunderstanding of the law undo your business plans.
Consult a Lawyer forHR compliance review to ensure your project hiring practices meet the standards set by Philippine labor law and Supreme Court rulings.

Protect your projects. Protect your people. Protect your business.

(This post was created with the aid of digital tools and reviewed by a licensed legal professional to ensure accuracy and relevance.)