Quick answer

Philippine labor law strongly favors security of tenure, but it does recognize fixed-term (or term) employment, where the employment is for a definite period that ends automatically upon the arrival of the agreed term, without need of a dismissal. The leading authority is the Brent School doctrine, in which the Supreme Court held that fixed-term employment is not per se illegal, and that the decisive determinant is the day certain agreed upon by the parties for the commencement and termination of the relationship, provided the term was knowingly and voluntarily agreed upon and did not circumvent security of tenure. To be valid, a fixed-term contract must meet criteria: the fixed period was knowingly and voluntarily agreed upon by the parties, without any force, duress, or improper pressure, and without the employer's moral dominance being exploited; or it satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with no moral dominance exercised by the former over the latter. Fixed-term employment is common and legitimate for positions like corporate officers with a set term, project consultants, seasonal roles, or foreign nationals on a work permit tied to a period. However, fixed-term contracts cannot be used as a device to prevent an employee from acquiring regular status; where the work is necessary and desirable and the repeated renewal of short-term contracts is a scheme to avoid regularization (contract-to-contract or 'endo'), the courts will disregard the fixed-term label and treat the worker as regular. So a fixed-term contract validly ends the employment on the agreed date if it was freely and equally agreed upon, but it will not be honored when used to defeat security of tenure.

Fixed-Term Employment Is Valid

Fixed-term employment is for a definite period that ends automatically on the agreed day certain, without a dismissal. The Brent School doctrine holds it is not per se illegal.

The Brent Criteria

It is valid if the period was knowingly and voluntarily agreed upon, without force, duress, or the employer's moral dominance, or the parties dealt on more or less equal terms. It is legitimate for corporate officers, consultants, seasonal roles, and the like.

Not a Device Against Regularization

A fixed-term contract cannot be a scheme to prevent regular status. Where the work is necessary and desirable and short contracts are repeatedly renewed to avoid regularization ('endo'), the courts disregard the label and treat the worker as regular.

Practical Takeaways

Frequently Asked Questions

Is fixed-term employment legal in the Philippines? Yes. Under the Brent School doctrine, fixed-term employment is not per se illegal. A contract for a definite period is valid if the term was knowingly and voluntarily agreed upon and did not circumvent security of tenure.

What makes a fixed-term contract valid? That the fixed period was knowingly and voluntarily agreed upon without force, duress, or the employer exploiting moral dominance, or that the parties dealt with each other on more or less equal terms.

Can an employer keep renewing short contracts to avoid regularization? No. Where the work is necessary and desirable and repeated renewals of short-term contracts are a scheme to prevent regularization, the courts will disregard the fixed-term label and treat the worker as a regular employee.

Does a fixed-term contract need a dismissal to end? No. Fixed-term employment ends automatically upon the arrival of the agreed term, without need of a notice of dismissal, provided the contract is valid.

This commentary is for general informational purposes only and does not constitute legal advice. For guidance specific to your situation, please consult a licensed attorney.

If you have questions about your rights or options under Philippine law, our firm is available to assist. You may reach us via Viber or WhatsApp, call us at 0995 433 5550, or send an email to vivasnobles@gmail.com. We look forward to hearing from you.