A technical working group (TWG) of the House committee on labor and employment chaired by Rep. Randolph Ting (3rd District, Cagayan) has expanded the parameters that constitute labor-only contracting in the draft House bill that seeks to end contractualization and de-regularization of workers, or “endo.”
The unnumbered bill aims to strengthen the security of tenure of private sector workers and restrict the practice of fixed-term employment. It consolidated House Bills 55, 76, 170, 341, 556, 563, 709, 712, 895, 916, 1045, 1208, 1351, 1563, 1837, 1857, 1910, 2389, 3556, 3769, 3802, 4443, 4444, 5130 and 5264. It amends Presidential Decree No. 442, or the Labor Code of the Philippines.
Article 106 of the bill differentiates job contracting, which is permitted, from labor-only contracting. Under the changes to Article 106, contracting is considered labor-only if the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others; or the workers recruited and placed by such persons are performing activities which are directly related, indispensable and essential to the principal business of the employer.
During the hearing, Rep. Ariel Casilao (Part-Listt, ANAKPAWIS) proposed the addition of a third condition: if the control over the outcome of the employee lies with the person supplying the worker, it shall also be considered labor-only contracting.
Previously, the first two conditions were requisite to establish that a company engages in labor-only contracting. Now, the amendments of the TWG recognize that meeting any of the three conditions will qualify contracting as labor-only.
The TWG also amended the bill through the addition of Article 106-A, which outlines licensing for job contractors. It mandates that licenses for existing job contractors shall not be renewed by the Department of Labor and Employment unless they are in an industry or perform work classified by the DOLE Secretary as open for legitimate job contracting.
Resource speakers and House members alike asserted that the power awarded to the DOLE Secretary by Article 106-A is vulnerable to abuse. In response, the TWG further specified that the classifications to be imposed by the DOLE Secretary shall be based on the unanimous recommendation of the National Tripartite Industrial Peace Council.
The TWG also greenlighted changes to Article 294, which seeks to ensure workers’ security of tenure. The article provides that in cases of regular employment, the employer cannot terminate the service of an employee without just or authorized cause, or without observance of due process. The employer shall also have the burden of proving the termination is with cause and due process.
It also establishes that an illegally dismissed employee is entitled to reinstatement without loss of seniority rights and benefits. They are also entitled to backwages, accrued benefits and full remuneration as provided by the law, company policy and collective bargaining agreement.
The amendments to Article 294 also provide that backwages include the employer’s share in contribution to the Social Security System (SSS), Philippine Health Insurance Corporation (PhilHealth) and Home Development Fund (PAG-IBIG). These shall be remitted together with the employee’s share to the respective agencies, free from interest and late remittance penalties.
Actual, moral, exemplar and other forms of damages may also be awarded.
“It’s very hard to draw the line because of course, we don’t want to stifle entrepreneurship in the country. But we also don’t want our laborers to lose out,” said Rep. Manuel Zubiri (3rd District, Bukidnon) during the TWG meeting. (CONGRESS-PR)
