Republic of the Philippines
HOUSE OF REPRESENTATIVES | *R ECEIVE|
Quezon City
EIGHTEENTH CONGRESS
First Regular Session

House BILL No. 3381

Introduced by
BAYAN MUNA Party-List Representatives FERDINAND R. GAITE,
CARLOS ISAGANI T. ZARATE, and EUFEMIA C. CULLAMAT,
GABRIELA Women’s Party Representative ARLENE D. BROSAS,
ACT TEACHERS Party-List Representative FRANCE L. CASTRO,
and KABATAAN Party-List Representative SARAH JANE L. ELAGO

AN ACT STRENGTHENING THE WORKERS’ RIGHT TO SECURITY OF TENURE,
AMENDING FOR THE PURPOSE PRESIDENTIAL DECREE NO 442, AS AMENDED,
OTHERWISE KNOWN AS THE LABOR CODE OF THE PHILIPPINES

EXPLANATORY NOTE

‘The 1987 Constitution upholds the full protection to labor. Section 3 of Article XIII states that “the
State shall afford full protection to labor, local and overseas, organized and unorganized, and
promote full employment and equality of employment opportunities for all.” Likewise, all workers
“shall be entitled to security of tenure, humane conditions of work, and a living wage.”

President Rodrigo Duterte vowed to stop the practice of “endo” or labor contractualization. Yet, more
than three (3) years into the Duterte presidency, labor contractualization has worsened and become
‘even more widespread, both in the private and public sectors.

On July 26, 2019, President Duterte even vetoed Senate Bill No. 1826 and House Bill 6908 or the
‘Security of Tenure and End Endo Bill — to the approval of capitalists, but, with the utter dismay of
labor groups.

While the President’s veto message stated his supposed “firm commitment to protect the workers’
right to security of tenure”, the veto reflected his true bias and priority of business and capitalists”
interests over and above workers’ rights and welfare.

President Duterte said that “legitimate job contracting should be allowed”, businesses “allowed to
determine whether they should outsource certain activities or not”... “regardless of whether this is
directly related to their business”. He said that “sweeping expansion of the definition of labor only
contracting destroys the delicate balance” between the interest of labor and management “and will
place capital and management at an impossibly difficult predicament”.

President Duterte must have forgotten that the vetoed bill was workers” security of tenure bill, not a
security of business bill. Contractualization persisted because present laws and regulations allowed
jjob contracting and businesses were able to get around the prohibited labor-only contracting. By
allowing business to determine which work is up for contractualization, President Duterte is negating
the Labor Code definition of regular work as “desirable or necessary in the business or trade” and thus
‘opens up all work and positions for contractualization.


Existing rules and regulations are ineffective in curbing contractualization, and have in factonly further
promoted and legitimized contractual employment schemes. In particular, the Department of Labor and
Employment Department Order 174-17 issued on March 16, 2017 and Executive Order No 51 signed
‘on May 1, 2018, merely repeated what were provided under previous rules on prohibition of labor-only
contracting and allowed job contracting.

According to IBON Databank, there are some 8.5 million non-regular workers in private companies
and more than 800,000 non-regular workers in government agencies. Construction, real estate and
manufacturing have the most non-regular workers, where 7 out of 10 workers, 5 out of 10 workers,
and 4 out of 10 workers, respectively, are non-regular or agency-hired.

According to labor group Kilusang Mayo Uno the number of contractual workers exceed 25 million
or 60% of the total employed.

Labor contractualization blatantly violates the worker’s right to security of tenure. Many contractual
workers like in the case of Peerless Manufacturing Corporation (PEPMACO), Nutri Asia, Sumifru and
Zagu, workers have worked for as long as 12 years and were performing work that are desirable and
necessary in the business, yet were never regularized.

Aside from having no security of tenure, contractual workers have no or lower benefits, no social
insurance protection, no right to self-organization, no promotion opportunities, have higher withholding
taxes, and, become targets of discrimination at work.

In general, contractualization is aimed at pressing down workers' wages and benefits while
increasing more the capitalists’ profits.

In particular, itis aimed at the following: 1) weakening trade unionism through the reduction of the
traditional base of trade unions which are permanent workers; 2) systematic and efficient co-opting of
workers into subscribing to an ideology that attacks workers! organization and unionism (employment
vs. union mentality); 3) depriving workers of benefits and wages that are due to regular workers and
the possibility of improving their working conditions through unionism and collective bargaining and;
4) allowing capitalists to earn maximum profits and lessen the impact of economic crisis by constant
adjustments in current and long-term production costs through wage reduction and elimination of
workers’ benefits from long-term employment.

With this reality, the State must determinedly protect and uphold workers’ rights to decent and long-
term employment. The challenge lies with Congress to uphold the people’s rights and interests by
passing a law that will truly protect workers’ right to security of tenure, declare all forms of
contractual employment as illegal and penalize those who will continue to carry out this anti-worker
scheme.

In view of the foregoing, the passage of this bill is earnestly sought.

Approved,

\
a)
INAND R. GAITE wr SBR isco Stare

BAYAN MUNA Partylist BAYAN iA Partylist


REP. EUFEMAA C. CULLAMAT
BAYAN MUNA Partylist

REP. iCHE: CASTRO
AC. ACH RRS Party-List

eo
D. BROSAS

GABRIELA Women’s Party

MK I.

|ANE I. ELAGO
.N Party-List


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

House BiLLNo._3381

Introduced by

BAYAN MUNA Party-List Representatives FERDINAND R. GAITE,
CARLOS ISAGANI T. ZARATE, and EUFEMIA C. CULLAMAT,
GABRIELA Women’s Party Representative ARLENE D. BROSAS,

ACT TEACHERS Party-List Representative FRANCE L. CASTRO,

and KABATAAN Party-List Representative SARAH JANE I. ELAGO

AN ACT STRENGTHENING THE WORKERS’ RIGHT TO SECURITY OF TENURE,
AMENDING FOR THE PUPOSE PRESIDENTIAL DECREE NO 442, AS AMENDED,
OTHERWISE KNOWN AS THE LABOR CODE OF THE PHILIPPINES

Be it enacted by the Senate and the House of Representatives of the Republic of the Philippines in
Congress assembled:

Section 1. This law would be known as the ‘"SECURITY OF TENURE ACT OF 2019."

Section 2. Article 106 of the Labor Code of the Philippines is hereby repealed and substituted as
follows:

[Art. 106. Contractor or subcontractor. Whenever an employer enters into a contract with
another person for the performance of the former’s work, the employees of the contractor and
of the latter’s subcontractor, if any, shall be paid in accordance with the provisions of this
Code.

In the event that the contractor or subcontractor fails to pay the wages of his employees in
accordance with this Code, the employer shall be jointly and severally liable with his
contractor or subcontractor to such employees to the extent of the work performed under the
contract, in the same manner and extent that he is liable to employees directly employed by
him.

The Secretary of Labor and Employment may, by appropriate regulations, restrict or prohibit
the contracting-out of labor to protect the rights of workers established under this Code. In so
prohibiting or restricting, he may make appropriate distinctions between labor-only
contracting and job contracting as well as differentiations within these types of contracting
and determine who among the parties involved shall be considered the employer for purposes
of this Code, to prevent any violation or circumvention of any provision of this Code.

‘There is "labor-only" contracting where 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, and the workers recruited and placed by such person are performing
activities which are directly related to the principal business of such employer. In such cases,
the person or intermediary shall be considered merely as an agent of the employer who shall
be responsible to the workers in the same manner and extent as if the latter were directly


‘employed by him.

"ARTICLE 106. PROHIBITION OF CONTRACTUALIZATION AND FIXED TERM
EMPLOYMENT. ALL FORMS OF CONTRACTUALIZATION AND FIXED TERM
EMPLOYMENT ARE HEREBY PROHIBITED. JOB CONTRACTING, OR THE
CONTRACTING OUT OF A WORK BY THE PRINCIPAL EMPLOYER TO A
CONTRACTOR, MANPOWER AGENCY OR A SIMILAR ANALOGOUS ENTITY, IS
HEREBY PROHIBITED.

DIRECT-HIRING OF CONTRACTUAL EMPLOYEES OR WORKERS IS ALSO HEREBY
PROHIBITED. VIOLATIONS SHALL CONSTITUTE UNFAIR LABOR PRACTICE AND
SHALL BE DEEMED UNLAWFUL AND PENAL IN NATURE AND WILL BE SUBJECT
TO CRIMINAL PROSECUTION.

WHEN THE EMPLOYER CONTRACTS OR SUBCONTRACTS THE PERFORMANCE
OF A WORK THAT IS NECESSARY OR DESIRABLE TO ITS BUSINESS OR
OPERATIONS, THE WORKER OR WORKERS SUPPLIED BY A THIRD PERSON OR
PARTY UNDER THIS PARAGRAPH SHALL BE CONSIDERED REGULAR EMPLOYEE
OR EMPLOYEES OF THE PRINCIPAL EMPLOYER, AS PROVIDED FOR IN ARTICLE
295 (280) AND ARTICLE 296 (281), AS AMENDED, OF THE LABOR CODE.

THE BURDEN OF PROOF IN SHOWING THAT THE WORK PERFORMED IS NOT
NECESSARY OR DESIRABLE TO THE EMPLOYER’S BUSINESS OR OPERATIONS
LIES ON THE EMPLOYER.

THERE IS CONTRACTUALIZATION WHENEVER AN EMPLOYER ENTERS INTO A
CONTRACT WITH ANOTHER PERSON FOR THE PERFORMANCE OF THE
FORMER’S WORK. THIS INCLUDES WORKING ARRANGEMENTS WHEREBY:

a. APRINCIPAL AGREES TO CONTRACT OUT OR FARM OUT WITH A
CONTRACTOR, SUBCONTRACTOR, MANPOWER AGENCY, WORKERS’
COOPERATIVE, OR A SIMILAR OR ANALOGOUS ENTITY, THE PERFORMANCE
OR COMPLETION OF A SPECIFIC JOB, WORK OR SERVICE WITHIN A DEFINITE
OR PREDETERMINED PERIOD; REGARDLESS OF WHETHER SUCH JOB, WORK
OR SERVICE IS TO BE PERFORMED OR COMPLETED WITHIN OR OUTSIDE
THE PREMISES OF THE PRINCIPAL; OR

b. APERSON, PARTNERSHIP, ASSOCIATION OR CORPORATION, WHICH, NOT
BEING A PRINCIPAL, CONTRACTS WITH A CONTRACTOR, SUBCONTRACTOR,
MANPOWER AGENCY, WORKERS’ COOPERATIVE OR ANY OTHER SIMILAR
OR ANALOGOUS ENTITY FOR THE PERFORMANCE OF ANY WORK, TASK, JOB
OR PROJECT.”

Section 3. Articles 107, 108 and 109 of the Labor Code of the Philippines are hereby repealed.

Section 4. Article 294 [279] of the Labor Code of the Philippines is hereby amended to read as
follows:

“Art.294 [279]. Security of tenure. [In cases of regular employment, the employer shall not
terminate the services of an employee except for] NO EMPLOYEE REGARDLESS OF
EMPLOYMENT STATUS SHALL BE DISMISSED WITHOUT a just cause or [when
authorized by this Title] DUE PROCESS. [An] A REGULAR employee who is unjustly
dismissed from work shall be entitled to IMMEDIATE reinstatement EVEN PENDING
APPEAL AND without loss of seniority rights and other privileges AND BENEFITS.


ADDITIONALLY, THE ILLEGALLY DISMISSED EMPLOYEE SHALL BE ENTITLED
TO [and to his] full backwages AND ACCRUED BENEFITS AND REMUNERATIONS
PROVIDED BY LAW, COMPANY POLICY AND COLLECTIVE BARGAINING
AGREEMENT, [inclusive of allowances, and to his other benefits or their monetary
equivalent] computed from the time his compensation was withheld [from him] up to the time
of [his] actual reinstatement.

IF REINSTATEMENT IS NO LONGER FEASIBLE DUE TO STRAINED
RELATIONSHIPS BETWEEN THE PARTIES, OR , AS WHEN PRAYED FOR BY THE
EMPLOYEE, THE EMPLOYER, OTHER THAN THE PAYMENT OF BACK WAGES, IS
‘ALSO LIABLE TO PAY THE DISMISSED EMPLOYEE OR EMPLOYEES SEPARATION
PAY EQUIVALENT TO AT LEAST TWO (2) MONTHS OR TO AT LEAST TWO (2)
MONTHS PAY FOR EVERY YEAR OF SERVICE, WHICHEVER IS HIGHER.

FURTHER, WITHOUT PREJUDICE TO THE OTHER PENALTIES THAT MAY BE
IMPOSED UNDER THIS CODE, ANY EMPLOYER WHO UNJUSTLY DISMISSED AN
EMPLOYEE SHALL BE LIABLE TO PAY A FINE OF DOUBLE THE AMOUNT OF THE
FULL BACK WAGES, INCLUSIVE OF ALLOWANCES, THAT THE DISMISSED
EMPLOYEE IS ADJUDGED TO RECEIVE.

A DISMISSAL WITHOUT JUST OR AUTHORIZED CAUSE OR WITHOUT
OBSERVANCE OF PROCEDURAL DUE PROCESS IS ILLEGAL. AN EMPLOYEE
WHOSE DISMISSAL IS DECLARED ILLEGAL BASED EXCLUSIVELY ON LACK OF
PROCEDURAL DUE PROCESS IS ENTITLED TO REASONABLE NOMINAL
DAMAGES AND COSTS OF SUIT. THE EMPLOYER SHALL HAVE THE BURDEN OF
PROVING THAT THE TERMINATION IS WITH CAUSE AND DUE PROCESS.”

Section 5. Article 295 [280] of the Labor Code of the Philippines is hereby amended to read as
follows:

“ARTICLE 295 [280]. Regular [and casual] employment. - The provisions of written
agreement to the contrary notwithstanding and regardless of the oral agreement of the parties,
an employment shall be deemed to be regular where the employee OR WORKER has been
‘engaged to perform activities which are usually necessary or desirable in the usual business or
trade of the employer. NO EMPLOYMENT WITH A FIXED TERM OR DEFINITE
PERIOD SHALL BE ALLOWED EXCEPT IN CASES OF OVERSEAS FILIPINO
WORKERS, RELIEVERS WHO ARE TEMPORARY REPLACEMENTS OF ABSENT
REGULAR EMPLOYEES WHOSE ENGAGEMENTS SHALL NOT EXCEED ONE (1)
WEEK, PROJECT AND SEASONAL EMPLOYEES. [except where the 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 service
to be performed is seasonal in nature and the employment is for the duration of the season.]

[An employment shall be deemed to be casual if it is not covered by the preceding paragraph:
Provided, That any employee who has rendered at least one year of service, whether such
service is continuous or broken, shall be considered a regular employee with respect to the
‘activity in which he/she is employed and his/her employment shall continue while such
activity exists.]

‘ALL OTHER FORMS OF DISCONTINUOUS EMPLOYMENT ARE PROHIBITED.

ANY STIPULATION IN ANY WRITTEN OR ORAL CONTRACT OF EMPLOYMENT,
‘ALSO KNOWN AS ENDO CONTRACT, FOR A DEFINITE OR FIXED PERIOD
DESIGNED TO SUBVERT THE PROVISIONS OF THIS ACT AND COVERING WORK
ACTIVITIES WHICH ARE NECESSARY OR DESIRABLE IN THE USUAL BUSINESS

6


OR TRADE OF THE EMPLOYER AS DEFINED UNDER THIS TITLE SHALL BE NULL
AND VOID AB INITIO AND THE PERSON OR PERSONS RESPONSIBLE FOR SUCH
ACTS SHALL BE PENALIZED IN ACCORDANCE WITH SECTION 10 HEREOF.
FURTHER, NOTWITHSTANDING THE VOID CHARACTER OF SUCH ‘ENDO
CONTRACT’, WORKERS UNDER SUCH ARRANGEMENTS ARE DEEMED REGULAR
EMPLOYEES RECKONED FROM THE FIRST DAY OF EMPLOYMEN

Section 6. A new Article 295-A is hereby inserted to the Labor Code to read as follows:

“ARTICLE 295 -A. EMPLOYER-EMPLOYEE RELATIONSHIP. THERE EXISTS AN
EMPLOYER-EMPLOYEE RELATIONSHIP WHEN THE WORKER IS ENGAGED TO
RENDER WORK OR SERVICE UNDER THE CONTROL OR SUPERVISION OF THE
EMPLOYER, NOT ONLY AS TO THE END TO BE ACHIEVED, BUT ALSO AS TO THE
MANNER, MEANS, AND METHOD IN REACHING THE END. PAYMENT OF
REMUNERATION, HOWEVER DENOMINATED, TO THE WORKER ALSO INDICATES
THE EXISTENCE OF EMPLOYER-EMPLOYEE RELATIONSHIP.”

Section 7. A new Article 295-B is hereby inserted to read as follows:

“ARTICLE 295-B. STATUS OF EMPLOYMENT. ALL EMPLOYEES, EXCEPT THOSE
UNDER PROBATIONARY EMPLOYMENT, ARE DEEMED REGULAR, INCLUDING
PROJECT AND SEASONAL EMPLOYEES.

ANY PROVISION AND EMPLOYMENT CONTRACTS FIXING THE PERIOD OF
EMPLOYMENT SHALL BE VOID; AND THE EMPLOYEE SO ENGAGED SHALL
AUTOMATICALLY BE DEEMED A REGULAR EMPLOYEE OF THE EMPLOYER.

PROJECT AND SEASONAL EMPLOYEES ARE REGULAR FOR THE DURATION OF
THE PROJECT OR SEASON, AS THE CASE MAYBE. FOR THIS PURPOSE, PROJECT
EMPLOYMENT REFERS TO AN EXISTING PROJECT OR UNDERTAKING THE
NATURE OF WHICH IS TEMPORARY AND THE COMPLETION OR TERMINATION
HAS BEEN DETERMINED AND MADE KNOWN TO THE EMPLOYEE AT THE TIME
OF THE ENGAGEMENT. SEASONAL EMPLOYMENT IS BASED ON THE
EXISTENCE OF A SEASON AND SHALL ONLY BE APPLICABLE IN AGRICULTURAL
WORK. IN PROJECT AND SEASONAL EMPLOYMENT, WORKERS ARE CALLED TO
WORK FROM TIME TO TIME AND TEMPORARILY LAID-OFF DURING THE
COMPLETION OF THE PROJECT OR OFF-SEASON, BUT ARE IN THE WORK POOL
ON LEAVE WITH OR WITHOUT PAY STATUS IN BETWEEN PROJECTS OR
SEASONS. SEASONAL WORKERS SHALL HAVE THE RIGHT OF FIRST REFUSAL TO
THE TASK, WORK, OR PROJECT, WHICH IS THE SUBJECT MATTER OF HIS/HER
EMPLOYMENT.

ALL OTHER FORMS OF EMPLOYMENT ARE PROHIBITED AND WORKERS UNDER
SUCH ARRANGEMENTS ARE DEEMED REGULAR EMPLOYEES RECKONED FROM
THE FIRST DAY OF EMPLOYMENT.”

Section 8, Article 296 [281] of the Labor Code of the Philippines is hereby amended to read as
follows:

“Art. 296 [281]. Probationary employment. Probationary employment shall not exceed six (6)
months from the FIRST DAY OF SERVICE OF AN EMPLOYEE [date the employee started
working, unless it is covered by an apprenticeship agreement stipulating a longer period).
‘THIS PROVISION APPLIES TO ALL WORKERS OR EMPLOYEES, REGARDLESS OF
‘THE NATURE OF EMPLOYMENT, CONTINUOUS OR BROKEN.


THE RIGHTS, TERMS AND CONDITIONS OF EMPLOYMENT OF PROBATIONARY
EMPLOYEE SHALL NOT BE LOWER THAN THE MINIMUM STANDARDS SET BY
LAWS OR REGULATIONS.

The services of an employee who has been engaged on a probationary basis may be
terminated for a just cause or when he fails to qualify as a regular employee in accordance
with reasonable standards made known by the employer to the employee at the time of his
engagement. An employee who is allowed to work after a probationary period shall
AUTOMATICALLY be considered a regular employee.”

Section 9. Investigation and Enforcement. - The DOLE shall have the authority to investigate and
require the keeping of records necessary for the administration of this Act. It shall issue such rules,
regulations, orders and instructions as it deems necessary and appropriate to carry out its
responsibilities under this Act.

Section 10. Penalty. - Any violation of this Act shall be punished with a fine of not less than one
million pesos (P1,000,000.00) but not more than ten million pesos (P10,000,000.00), or imprisonment
of not less than six (6) months but not more than three (3) years, or both at the discretion of the court.
Furthermore, the business permit of the violating corporation or business entity would be suspended
for one (1) month to three (3) years for the first offense and the cancellation of the business permit for
the second offense. If the offense is committed by a corporation, trust, firm, partnership or association
or other entity, the penalty shall be imposed upon the guilty officer or officers of such corporation,
trust, firm, partnership or association or entity.

Section 11. Separability Clause. - Should any provision herein be subsequently declared invalid or
unconstitutional, the same shall not affect the validity or the legality of the other provisions not so
declared.

Section 12. Repealing Clause. - All laws, presidential decrees, executive orders, rules and regulations,
other issuances, and parts thereof, which are inconsistent with the provisions of this Act, are hereby
repealed and modified accordingly.

Section 13. Effectivity Clause. - This Act shall take effect fifteen (15) days after publication in the
Official Gazette or in any newspaper of general circulation.

Approved,