Project employment requires that the duration and scope of the project must be made known to the employee. The duration need not indicate a specific date but may only be determinable as held by the SC in the case below:
Ma. Charito C. Gadia, Ernesto M. Penas, Gemmabelle B. Remo, Lorena S. Quesea, et al. vs. Skyke Asia, Inc./Chuck Skykes/Mike Hinds/Michael Henderson
G.R. No. 209499, January 28, 2015
Sykes Asia is a corporation engaged in Business Process Outsourcing (BPO) which provides support to its international clients from various sectors (e.g., technology, telecommunications, retail services) by carrying on some of their operations, governed by service contracts that it enters with them. On September 2, 2003, Alltel Communications, Inc. (Alltel), a United States-based telecommunications firm, contracted Sykes Asia’s services to accommodate the needs and demands of Alltel clients for its postpaid and prepaid services (Alltel Project).
Thus, on different dates, Sykes Asia hired Gadia, et al. as customer service representatives, team leaders, and trainers for the Alltel Project. Services for the said project went on smoothly until Alltel sent two (2) letters to Sykes Asia informing the latter that it was terminating all support services provided by Sykes Asia related to the Alltel Project. In view of this development, Sykes Asia sent to Gadia, et al the end-of-life notices, informing them of their dismissal from employment due to the termination of the Alltel Project.
Aggrieved, Gadia, et al filed separate complaints for illegal dismissal against Sykes, et al. Sykes Asia, Chuck Sykes, the President and Chief Operating Officer of Sykes Enterprise, Inc., and Mike Hinds and Michael Henderson, the President and Operations Director, respectively, of Sykes Asia (Sykes, et al.), praying for reinstatement, backwages, 13th month pay, service incentive leave pay, night shift differential, moral and exemplary damages, and attorney’s fees. In their complaints, Gadia, et al alleged that their dismissal from service was unjust as the same was effected without substantive and procedural due process.
In their defense, Sykes, et al. averred that Gadia, et al were not regular employees but merely project-based employees, and as such, the termination of the Alltel Project served as a valid ground for their dismissal. In support of their position, Sykes, et al. noted that it was expressly indicated in Gadia, et al’ respective employment contracts that their positions are “project-based” and thus, “co-terminus to the project.”
Sykes, et al. further maintained that they complied with the requirements of procedural due process in dismissing Gadia, et al by furnishing each of them their notices of termination at least thirty (30) days prior to their respective dates of dismissal.
The LA ruled in favor of Sykes, et al., and accordingly, dismissed Gadia, et al.’s complaints for lack of merit. It found that Gadia, et al. are merely project-based employees, as their respective employment contracts indubitably provided for the duration and term of their employment, as well as the specific project to which they were assigned, i.e., the Alltel Project. Hence, the LA concluded that the cessation of the Alltel Project naturally resulted in the termination of Gadia, et al’ employment in Sykes Asia.
Gadia, et al appealed to the NLRC.
The NLRC modified the LA Decision, ruling that Gadia, et al. are regular employees but were validly terminated due to redundancy. Contrary to the LA’s finding, the NLRC found that Gadia, et al. could not be properly characterized as project-based employees, ratiocinating that while it was made known to Gadia, et al. that their employment would be co-terminus to the Alltel Project, it was neither determined nor made known to Gadia, et al, at the time of hiring, when the said project would end, be terminated, or be completed.
In this relation, the NLRC concluded that inasmuch as Gadia, et al. had been engaged to perform activities which are necessary or desirable in Sykes, et al.’s usual business or trade of BPO, Gadia, et al. should be deemed regular employees of Sykes Asia. This notwithstanding, and in view of the cessation of the Alltel Project, the NLRC found Gadia, et al.’s employment with Sykes Asia to be redundant; hence, declared that they were legally dismissed from service and were only entitled to receive their respective separation pay.
Sykes, et al. moved for reconsideration, which was, however, denied in a Resolution dated May 10, 2011. Unconvinced, Sykes Asia elevated the case to the CA on certiorari.
The CA annulled and set aside the ruling of the NLRC, and accordingly, reinstated that of the LA. It held that a perusal of Gadia, et al’ respective employment contracts readily shows that they were hired exclusively for the Alltel Project and that it was specifically stated therein that their employment would be project-based.
The CA further held that Gadia, et al.’s employment contracts need not state an actual date as to when their employment would end, opining that it is enough that such date is determinable.
Gadia, et al moved for reconsideration, which was, however, denied in a Resolution.
Hence, the petition.
Whether or not the positions in the employment contract that state “project-based” and “co-terminus to the project” can be considered as project and not regular
Whether or not the termination of the account of a call center company can result in the valid termination of employees
The SC did not find merit in the petition.
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Article 294 of the Labor Code, as amended, distinguishes a project-based employee from a regular employee stating that the provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee.
In Omni Hauling Services, Inc. vs. Bon, the Supreme Court extensively discussed how to determine whether an employee may be properly deemed project-based or regular. A project employee is assigned to a project which begins and ends at determined or determinable times. Unlike regular employees who may only be dismissed for just and/or authorized causes under the Labor Code, the services of employees who are hired as “project[-based] employees” may be lawfully terminated at the completion of the project.
The principal test for determining whether particular employees are properly characterized as “project[-based] employees” as distinguished from “regular employees,” is whether or not the employees were assigned to carry out a “specific project or undertaking,” the duration (and scope) of which were specified at the time they were engaged for that project.
Verily, for an employee to be considered project-based, the employer must show compliance with two (2) requisites, namely that: (a) the employee was assigned to carry out a specific project or undertaking; and (b) the duration and scope of which were specified at the time they were engaged for such project.
In this case, records reveal that Sykes Asia adequately informed Gadia, et al of their employment status at the time of their engagement, as evidenced by the latter’s employment contracts which similarly provide that they were hired in connection with the Alltel Project, and that their positions were “project-based and as such is co-terminus to the project.” In this light, the CA correctly ruled that Gadia, et al. were indeed project-based employees, considering that: (a) they were hired to carry out a specific undertaking, i.e., the Alltel Project; and (b) the duration and scope of such project were made known to them at the time of their engagement, i.e., “co-terminus with the project.”
As regards the second requisite, the CA correctly stressed that “[t]he law and jurisprudence dictate that ‘the duration of the undertaking begins and ends at determined or determinable times’” while clarifying that “[t]he phrase ‘determinable times’ simply means capable of being determined or fixed.”
In this case, Sykes Asia substantially complied with this requisite when it expressly indicated in Gadia, et al.’s employment contracts that their positions were “co-terminus with the project.” To the mind of the Court, this caveat sufficiently apprised Gadia, et al that their security of tenure with Sykes Asia would only last as long as the Alltel Project was subsisting. In other words, when the Alltel Project was terminated, Gadia, et al. no longer had any project to work on, and hence, Sykes Asia may validly terminate them from employment.
The Court likewise notes the fact that Sykes Asia duly submitted an Establishment Employment Report and an Establishment Termination Report to the Department of Labor and Employment Makati Pasay Field Office regarding the cessation of the Alltel Project and the list of employees that would be affected by such cessation. As correctly pointed out by the CA, case law deems such submission as an indication that the employment was indeed project-based.