Contracts of Employment

Contracts of employment are imbued with public interest. There are four tests to ascertain the existence of an employer-employee relationship:

  • Manner of selection and engagement;
  • Payment of wages;
  • Presence or absence of the power of dismissal; and
  • Presence or absence of the power of control.

Of the four tests, the last one – control by the employer of the means, methods and manner by which the work is performed by the employee – is the most important.

Art. 280 of the LC provides for the following categories of employment:

  • Project – 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;
  • Seasonal – where the work or services to be performed is seasonal in nature and the employment is for the duration of the season; and
  • Casual – where the employment is not covered by the foregoing, provided that an employee who has rendered at least one year of service, whether continuous or broken, shall be considered regular with respect to the activity in which he or she is employed and his or her employment shall continue while the activity exists.

Another category of employment recognized in jurisprudence is “term” or “fixed-period employment.” This is based on art. 1193 of the CC, which states that obligations with a resolutory period take effect at once, but terminate upon arrival of the day certain – understood to be a day that must necessarily come. The decisive determinant in “term employment” should not be the activities that the employee is called upon to perform, but the day certain agreed upon by the parties for the commencement and termination of the employment relationship. Stipulations in employment contracts providing for “term employment” or “fixed-period employment” are valid when the period has been agreed upon knowingly and voluntarily by the parties, without force, duress or improper pressure exerted on the employee, and when such stipulations were not designed to circumvent the laws on security of tenure.

Probationary employment is not necessarily a category of employment. It pertains to a period of time. Under art. 281 of the LC, probationary employment shall not exceed six (6) months. An employee who is allowed to work after a probationary period shall be considered a regular employee. A probationary employee is, for a given period of time, under observation and evaluation to determine whether or not he or she is qualified for permanent employment. During the probationary period, the employer is given the opportunity to observe the skills, competence and attitude of the employee while the latter seeks to prove to the employer that he or she has the qualifications to meet the reasonable standards for permanent employment.

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