Guidelines Governing Employment of Workers in the Construction Industry

What is the coverage of the DO No. 19-93?

The DO shall be applied to all operations and undertakings in the construction industry and its subdivisions, namely: general building construction, general engineering construction and special trade construction, based on the classification code of the Philippine Construction Accreditation Board of the Construction Industry Authority of the Philippines; to companies and entities involved in demolition works; and to those falling within the construction industry as determined by the Secretary of Labor of employment. (Sec 1)

What are the classifications of employees in the construction industry?

          Employees in the construction industry may be classified as

1. Project employees – those employed in connection with a particular construction or phase thereof and whose employment is co-terminous with each project or phase of the project to which they are assigned.

2. Non-project employees – those employed without reference to any particular construction project or phase of a project.

What are the indicators of a project employment?

Section 2.2 of D.O. No. 19-93 provides circumstances that may be considered as indicators that an employee is a project employee, to wit:

a. The duration of the specific or identified undertaking for which the worker is engaged is reasonably determinable.

b. Such duration, as well as the specific work or service to be performed, is defined in an employment agreement and is made clear to the employee at the time of hiring.

c. The work or service performed by the employee is in connection with the particular project or undertaking for which he is engaged.

d. The employee, while not employed and awaiting engagement, is free to offer his services to any other employer.

e. The termination of his employment in the particular project or undertaking is reported to the DOLE Regional Office having jurisdiction over the workplace within 30 days following the date of his separation from work, using the prescribed form on employee’s terminations or dismissal or suspensions.

f. An undertaking in the employment contract by the employer to pay completion bonus to the project employee as practiced by most construction companies.

What are the types of non-project employees?

a. Probationary employee – those who, upon the completion of the probationary period, are entitled to regularization. Upon their engagement, probationary employees should be informed of the reasonable standards under which they will qualify as regular employees.

b. Regular employees – are those appointed as such or those who have completed the probationary period or those appointed to fill up regular positions vacated as a result of death, retirement, resignation or termination of employment of the regular holders thereof.

c. Casual employees – are those employed to perform work not related to the main line of business of the employer. Casual employees who are employed for at least 1 year, whether continuous or broken, shall be considered regular with respect to the activity in which they are employed and their employment shall continue for as long as such activity exist, unless the employment is terminated sooner by the employer for a just or authorized cause, or voluntarily by the employee.

Are the employees of particular project or phase thereof are separated from employment at the same time?   

No. The employees of a particular project are not separated from work at the same time. Some phases of the project are completed ahead of others. Meanwhile, those employed in a particular phase of a construction project are also not separated at the same time. In other words, less and less employees are required as the phase draws closer to completion.

Can a project employee be rehired upon completion of the project or a phase thereof?

Yes. Provided, that such rehiring conforms with the provisions of law and D.O. No. 19-93. In such case, the last day of service with the employer in the preceding project should be indicated in the employment agreement.

Is contracting and subcontracting allowed in construction industry?

Yes. The practice of contracting out certain phases of a construction project is recognized by law, particularly wage legislations and wage orders and by industry practices. The Labor Code and its IRR allow the contracting out of jobs under certain conditions. Where such job contracting is permissible, the construction workers are generally considered as employees of the contractor or subcontractor, as the case may be, subject to Art 109 of the Labor Code, as amended.

Please see Department Order No. 174, series of 2017 or the Rules Implementing Articles 106 to 109 of the Labor Code, as amended.

Are project employees covered by security of tenure?

Yes. Security of tenure means that no employee can be dismissed from work except for a just or authorized cause, and only after due process. Hence, during the period of their employment, a project employee can only be terminated for a just or authorized cause or there is a showing that his services are unsatisfactory.

Are project employees entitled to separation pay?

General Rule: No. Project employees are not by law entitled to separation pay if their services are terminated as a result of the completion of the project or any phase thereof in which they are employed. Likewise, project employees whose services are terminated because they have no more work to do or their services are no longer needed in the particular phase of the project are not by law entitled to separation pay. 

Exception: If the project or the phase of the project the employee is working on has not yet been completed and his services are terminated without just cause or authorized cause and there is no showing that his services are unsatisfactory, the project employee is entitled to reinstatement with backwages to his former position or substantially equivalent position. If reinstatement is no longer possible, the employee is entitled to his salaries for the unexpired portion of the agreement.

When is a project employee be considered a regular employee?

Project employees whose aggregate period of continuous employment in a construction company is at least one year shall be considered regular employees, in the absence of a “day certain” agreed upon by the parties for the termination of their relationship.

A “day” as used herein, is understood to be that which must necessarily come, although it may not be known exactly when. This means that where the final completion of a project or phase thereof is in fact determinable and the expected completion is made known to the employee, such project employee may not be considered regular, notwithstanding the 1 year duration of employment in the project or phase thereof or the 1 year duration of two or more employments in the same project or phase of the project.

The completion of the project or any phase thereof is determined on the date originally agreed upon or the date indicated in the contract or, if the same is extended, the date of termination of project extension.

Is payment by results allowed?

Yes. Where the payment for work or services rendered is by results, e.g., piece rate or pakiao, the rate shall be determined on the basis of not less than the minimum wage applicable in the region where the construction project is located. The minimum wage rates of workers who are paid by results may be determined by the appropriate DOLE Regional Office on its initiative or upon request of interested parties.

When can a project and non-project employee be preventively suspended?

They can be preventively suspended if their continued employment poses a serious and imminent threat to the life or property of the employer or of their co-workers.

     Reminders:

a. No preventive suspension shall last longer than 15 days.  

b. After the 15 days suspension, the employer shall thereafter reinstate the worker in his former or in a substantially equivalent position.

c. The employer may extend the period of suspension provided that during the period of extension, he pays the wages and other benefits due to the worker.

d. During the period of suspension, the employer, with notice to the employee, shall hold a fact-finding investigation to enable the suspended employee to be heard and be assisted by his counsel or representative, if he so desires, of the charge against him.

Right to statutory benefits

During the period of their employment, the construction employees whether project or non-project shall enjoy all the benefits due them under the law, both monetary and non-monetary.

Right to self-organization and collective bargaining

Trade unions is highly encouraged in the construction industry provided that the formation or activities of a recognized trade union will not prejudice existing bargaining units, subject to existing laws. Trade unions refer to a combination of workers of the same trade or of several allied trades, for the purpose of securing by united action the most favorable conditions regarding wages, hours of labor and other terms and conditions of employment for its members.

Reference:

- Department Order No. 19, Series of 1993