Contractual employment with lock-in period valid

Persida Acosta

Persida Acosta

Dear PAO,
I am an employee of a private company having a fixed-term contract. There is a stipulation in my contract about prohibition of pre-termination, which states that I cannot resign because it would cause a breach of contract. I am not a project-based employee because my work is at my employer’s office, but they have the right to kick me out after my contract expires and I don’t have any right to leave them if I am not happy anymore. Isn’t it unfair on my part?

Dear AC,
Aside from regular and casual employees, our Labor Code also recognizes employment of project employees or those whose 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 or where the work or services to be performed are seasonal in nature and the employment is for the duration of the season.

Contractual employment is recognized and usually retained in the business realm. In order that contractual employment could not be used to circumvent regular employment, the Supreme Court has laid down the guidelines before a contract of employment may be held as valid, to wit: stipulations in employment contracts providing for term employment or fixed period employment are valid when the period was agreed upon knowingly and voluntarily by the parties without force, duress or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent, or where it satisfactorily appears that the employer and employee deal with each other on more or less equal terms with no moral dominance whatever being exercised by the former over the latter (Article 280, Labor Code; Brent School, Inc. v. Zamora v. Ronald Zamora, G.R. No. L-48494, February 5, 1990).

On the other hand, a provision in the employment contract regarding lock-in period or prohibiting an employee from resigning or otherwise terminating his employment before the end of the period stated therein is valid because parties to a contract are free to establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order or public policy (Article 1306, Civil Code of the Philippines).

Based on the foregoing, your employment contract with a fixed term and containing a lock-in period is valid and binding upon you provided that you knowingly and voluntarily agreed thereto. Hence, you are bound to comply with the provision thereof in good faith. A violation of any of the provisions in the contract constitutes breach of contract that may hold you liable for damages. This is not considered unfair even if it turn out later that the terms became unfavorable to you.

We hope that we have answered your query. Our legal opinion may vary if other facts are stated or elaborated.

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to


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