Fixed-Term Employment Contract

Fixed-Term Employment Contract | Philippine Theo Law Gee 04/09/2018, 2*29 PM
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JANUARY 25, 2010JANUARY 26, 2010 by ATTYCORTES
Fixed-Term Employment Contract

LAW
LABOR LAW, LAW
15 COMMENTS
What is a fixed-term employment contract and when is it considered valid? The Supreme Court had
occasion to tackle these questions in the case of Cherry J. Price, et al. versus INNODATA Phils. Inc., et al.,
(G.R. No. 178505), promulgated on September 30, 2008.
Cherry, Stephanie and Lolita were employed as formatters by INNODATA a domestic corporation
engaged in the data encoding and data conversion business. The parties executed an employment
contract denominated as a “Contract of Employment for a Fixed Period,” stipulating that the contract
shall be for a period of one year.
The days passed by and soon Cherry and her companions found themselves separated from work
due to the end of their contract. Cherry and her companions decided to contest the validity of said
contract by filing a case for illegal dismissal. The case eventually reached the Supreme Court.
In the course of deciding the case the Court cited Art. 280 of the Labor Code which states, “The
provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement
of the parties, an employment shall be deemed 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…” According the Court:
“The employment status of a person is defined and prescribed by law and not by what the parties say
https://attycortes.wordpress.com/2010/01/25/fixed-term-employment-contract/ Page 1 of 6
“The employment status of a person is defined and prescribed by law and not by what the parties say
it should be. Equally important to consider is that a contract of employment is impressed with public
interest such that labor contracts must yield to the common good. Thus, provisions of applicable
statutes are deemed written into the contract, and the parties are not at liberty to insulate themselves
and their relationships from the impact of labor laws and regulations by simply contracting with each
other.”
It went on to say that, “Under Article 280 of the Labor Code the applicable test to determine whether
an employment should be considered regular or non-regular is the reasonable connection between
the particular activity performed by the employee in relation to the usual business or trade of the
employer.”
However, the High Court also pointed out that employment which requires performance of usual
and desirable functions, and does not exceed one year, does not always result in regular employment.
This is where the concept of fixed-term employment comes in:
“Under the Civil Code, fixed-term employment contracts are not limited, as they are under the
present Labor Code, to those by nature seasonal or for specific projects with predetermined dates of
completion; they also include those to which the parties by free choice have assigned a specific date of
termination….The decisive determinant in term employment is the day certain agreed upon by the
parties for the commencement and termination of their employment relationship, a day certain being
understood to be that which much necessarily come, although it may not be known when.”
Does this mean that fixed-term employment contracts are always valid, provided they are entered
into knowingly and voluntarily? No. In the case under consideration the Supreme Court emphasized
that fixed-term employment contracts are the exception rather than the general rule, and are valid
only under certain circumstances. Citing its earlier decision in Brent School v. Zamora (G.R. No. 48494,
5 February 1990, 181 SCRA 702) the Court identified several circumstances wherein a fixed-term is an
essential and natural appurtenance:
“Some familiar examples may be cited of employment contracts which may be neither for seasonal
work nor for specific projects, but to which a fixed term is an essential and natural appurtenance:
overseas employment contracts, for one, to which, whatever the nature of the engagement, the
concept of regular employment with all that it implies does not appear ever to have been applied,
Article 280 of the Labor Code notwithstanding; also appointments to the positions of dean, assistant
dean, college secretary, principal, and other administrative offices in educational institutions, which
are by practice or tradition rotated among the faculty members, and where fixed terms are a necessity
without which no reasonable rotation would be possible. Similarly, despite the provisions of Article
280, Policy Instructions No. 8 of the Minister of Labor implicitly recognize that certain company
officials may be elected for what would amount to fixed periods, at the expiration of which they
would have to stand down, in providing that these officials, “x x may lose their jobs as president,
executive vice-president or vice president, etc. because the stockholders or the board of directors for
one reason or another did not reelect them.”
The Court also mentioned the fact that in the same Brent case, it issued “a stern admonition that
The Court also mentioned the fact that in the same Brent case, it issued “a stern admonition that
where, from the circumstances, it is apparent that the period was imposed to preclude the acquisition
of tenurial security by the employee, then it should be struck down as being contrary to law, morals,
good customs, public order and public policy.”
To end the long story: Cherry and her companions were considered by the Court as regular
employees; and as far as their fixed-term employment contract was concerned, the Court had this to
say:
“After considering petitioners’ contracts in their entirety, as well as the circumstances surrounding
petitioners’ employment at INNODATA, the Court is convinced that the terms fixed therein were
meant only to circumvent petitioners’ right to security of tenure and are, therefore, invalid.”
15 Comments
Job Aware For Pc | Develop My Career

SEPTEMBER 18, 2014 AT 1:25 AM
[…] Fixed – Term Employment Contract | Philippine Theo Law Gee – Jan 25, 2010 · What is a
fixed-term employment contract and when is it considered valid? The Supreme Court had
occasion to tackle these questions in the case of …… […]
Reply
Alfred Dumingyay
APRIL 28, 2014 AT 8:51 AM
Hi Attorney,
I am working in a community corporation as an Assistant Camp Admin Manager. My first

contract given was a 3 months fixed term and at the same time probationary for 3 months. My
boss give me a failed evaluation after three (3) months. I can say that the evaluated conducted by
my superior is not fair for me so i contested it to the HR manager. The HR Manager give me
another one month extension to prove myself for the position but again a one month fixed term
again that supposedly will end on the 15th day of January 2014. Untill now i did not received any
notice with regards on my employment status, no new contract after my one month fixed term. I
started my work to the company last September 15, 2014 up to present. My question is am i
already a regular employee based on our labor law?
I really need your answer.
Thanks
Reply
attycortes
APRIL 28, 2014 AT 9:08 AM
The general rule is: an employee who is allowed to work beyond the probationary period
thereby becomes regular.
Reply
Sarah Ocampo
JANUARY 14, 2014 AT 11:08 AM
Hi Good Afternoon, I will ask some few questions Sir. 1. What is the maximum number of months
that a company would be able to have a fixed term employment with an applicant? 6 months? 1
year?
2. Is there a rule that would say after having a fixed term employment the company should absorb
or have the employee as a regular employee of the company?
Reply
attycortes
JANUARY 18, 2014 AT 4:20 PM
Hi Sarah, I think you’ll find the answers to your queries in the post above. But generally
speaking, there’s no particular time frame; it’s on a case-to case basis. And if it’s a valid fixed-
term agreement there’s no commitment to regularize the employee once the agreement
expires.
Reply
Dawn
Sir, i would just like to inquire regarding my case, i was once a fixed term employee, commencing
Jan- Dec, 2012, i decided to resign from this company and recently i just started my training this
Jan 2013 with my new employer, however my previous employer charge me of awol-
abandonement of work, is this kind of treatment acceptable with the general rule? thank you
Reply
attycortes
Hi Dawn,
Art. 285 of the Labor Code requires 1 month prior notice to employer otherwise the employee
can be held liable for damages.
Reply
mar
mar
DECEMBER 4, 2012 AT 2:42 AM
Sir,
My friend is working in a PROJECT of a non-profit organization of a religious group. Their
contract is only good for 6 months and is renewable. His contract has been renewed many times
but until now he is not a regular employee. this project started in 2010 and will end on 2014. non
of the workers are regular, nor casual, all are under project.
They receive the benefits provided by the law such as SSS, Philhealth, Pag-IBIG, income tax
returns, 13th month and above minimum wage salary.
Do they have the right to claim to be regular employees?
my intention is not to sue the organization but to help them be guided what is a legal thing to do
and to give to their workers what is due based on the law. thank you very much sir?
Reply
attycortes
DECEMBER 9, 2012 AT 6:33 PM
Hi Mar, I’ll try to blog on this when I have time. But generally “true” project employees are
regular only for the duration of the project. There are exceptions and I will try to blog on this
soon.
Reply
mar
DECEMBER 10, 2012 AT 11:53 PM
thank you sir
Roland de la Cruz
JULY 27, 2012 AT 9:51 AM
Sir, this is very useful…a significant # of companies are practicing this method to circumvent
“regularization and security of tenure”. This will help us secure a solid stand on worker’s right to
security of tenure.
Mabuhay po kayo and God Bless!
Reply
innohep
JULY 3, 2011 AT 10:03 PM
Thanks for sharing this attycortes. Most employees, those who had reached the end of their
contract and to us who are nearing our own, have the same sentiments on losing our job. As some
have wanted to bring this in legal court, some are afraid of the outcome that we may lose the case.
What advise can you give? Thanks
Reply
attycortes
JULY 4, 2011 AT 12:59 PM
Hi Innohep, I’m glad you found this helpful. I rarely check my blog nowadays and it might be
a long time before I get back to regular blogging. But anyway I’m sorry I can’t give you any
advice via this blog, as I don’t think this is the proper venue to dispense specific legal advice.
All I can do is suggest that you get in touch with your local labor lawyer. He’ll be in a better
position to advice you.
Regards and God bless.
Reply
innohep
JULY 3, 2011 AT 9:45 PM
thank you attycortes for sharing this. we are in the very same situation such as with Price, et al vs
INNODATA. but then many are afraid to challenge the company. What can you advise attycortes?
Thank you
Reply
EDwin P. Bacharo
JUNE 2, 2011 AT 3:44 PM
It is a good labor case example for us to be guided on the Supreme Court Decision.
Reply
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Fixed-Term Employment Contract | Philippine Theo Law Gee 04/09/2018, 2*29 PM

Philippine Theo Law Gee

A Filipino lawyer's musings on theology, law and

JANUARY 25, 2010JANUARY 26, 2010 by ATTYCORTES

Fixed-Term Employment Contract

Job Aware For Pc | Develop My Career

I am working in a community corporation as an Assistant Camp Admin Manager. My first

I really need your answer.

Do they have the right to claim to be regular employees?

Regards and God bless.

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