FIFTEENTH CONGRESS )
REPUBLIC OF THE PHILIPPINES )
FIRST REGULAR SESSION

HOUSE OF REPRESENTATIVES

Introduced by Representative Rufus B, Rodriguez and
Representative Maximo B. Rodriguez, Jr.

1060

House Bill No.

EXPLANATORY NOTE

The competition necessitated by the integration of world markets has
pushed domestic industries to devise various flexible work arrangements in
order to survive. Unfortunately, the Labor Code provisions are not responsive
to these changes. While two flexible forms of employment are recognized by
the Labor Code, namely project and seasonal employment, the rights of
workers under such arrangement required the intervention of the Supreme
Court in the interpretation of Articles 280 and 281.

It is therefore imperative to amend the Labor Code to institutionalize the
parameters for these flexible forms of employments, thereby protecting the
workers employed in these recognized forms of atypical employment in the
Labor Code,

Hence, the approval of this bill is earnestly sought.

RUFYS B. Ri |GUEZ

MAXIMO B. cise JR.


FIFTEENTH CONGRESS )
REPUBLIC OF THE PHILIPPINES =)
FIRST REGULAR SESSION

HOUSE OF REPRESENTATIVES

Introduced by Representative Rufus B. Rodriguez and
Representative Maximo B. Rodriguez, Jr.

1060

House Bill No.

AN ACT
PRESCRIBING WORK ARRANGEMENTS BASED ON SECURITY OF
TENURE, AMENDING FOR THIS PURPOSE, ARTICLES 156, 157, 158, 159,
160, 161, 162, 163, 164 AND 165 OF PRESIDENTIAL DECREE NUMBER
FOUR HUNDRED FORTY TWO (PD 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
Philippines in Congress assembled:

SECTION 1. Title. - This Act shall be called “The Security of Tenure
Law of 2010.”

SEC 2. Book Ill of Presidential Decree No. 442, as amended, otherwise
known as The Labor Code of the Philippines, is hereby further amended to
include Title IV entitled “Security of Tenure”. The provisions of this Act shall
comprise the new Articles 156-165 of the Labor Code.

SEC. 3. Classification of Workers.- Article 156 shall read as follows:

“Article 156. Classification of workers.- Work
arrangements based on security of tenure shall be as
follows: (a) contracts with an indefinite period; and (b)
contracts with a definite period. In general, an employment
contract shall be for an indefinite period, unless otherwise
stipulated and allowed by conditions stated in Article 158.”

SEC. 4. Security of Tenure — Article 157 shall read as follows:

“Article 157. Security of tenure. — Contracts with an
indefinite period shall not be terminated except for just or
authorized cause under Book VI. Contracts with a definite
period shall not be terminated except: (a) for just cause or


authorized cause under Book VI; and (b) upon expiration of
the stipulated period.”

SEC. 5. Contracts for definite period; when allowed — Article 158
shall read as follows:
“Article 158. Contracts for definite period; when
allowed. — Contracts for a definite period shall be allowed
only in the following situations:

(2) Replacement of an employee who is temporarily
absent;

(b) Temporary increase in the volume of business,
which in no case shall exceed six (6) months in a twelve
(12) month period;

(©) To meet expansion of a company's activity,
consisting of the launch of a new production line, product
or service, which in no case shall be less than six (6)
months nor more than three (3) years: Provided, That
employees still hired after the contract for definite period
shall be under a new contract for an indefinite period;

(a) Part-time contracts, where the employee undertakes
to render services for a number of hours or days less than
two thirds (2/3) of the usual number of working hours for
the same position in the establishment;

(e) Construction work, in which case the duration of the
Project or a specific phase thereof shall be indicated in the
contract and made known to the employee at the
commencement of the employment relationship: Provided,
That pertinent rules and regulations issued by the
Department of Labor and Employment (DOLE) on
employment in the construction industry shall continue to
remain in full force and effect;

() Professional sports;

(9) __ Corporate officers, and those occupying managerial,
confidential, or technical positions;

(n)_ Overseas Filipino Workers: Provided, That such
OFWs work under contracts of employment consistent with
Philippine Overseas Employment Authority (POEA) rules
and regulations;

(i) Officials of private academic institutions


() Seasonal positions or jobs in the tourism,
agriculture, and entertainment sectors: Provided, That the
duration of the season shall be specified in the contract of
employment and made known to the employee at the
commencement of the employment relationship; or

(k) Other cases where, based on the nature of the work
to be performed or on the circumstances under which it is
to be performed, and with no fraud, duress or coercion,
practiced upon the worker, the employment relationship
cannot be of indefinite duration.”

SEC. 6. Contracts for definite period; form and contents. -— Article
159 shall read as follows:

“Article 159. Contracts for definite period: form and
contents. - The contract for a definite period shall be in
writing and signed by the employer and employee, stating
the following:

precise purpose of employment;

name and qualifications of the employee;

description of the job;

wages and other terms and conditions of employment;
date of expiry of the contract; and

stipulations for renewal: Provided, That renewal must
be once only, and the total duration of the contract,
including renewal, may not exceed two (2) years: Provided
further, That an employee for an indefinite period allowed
to work after the expiry of the stipulated period without the
benefit of a renewed contract shall be deemed engaged for
an indefinite period.

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All of the foregoing contents of a contract for a
definite period shall be made known to the employee at the
commencement of the employment relationship.

Every contract of employment for a definite period
shall be made available by the employer upon written
demand by the Secretary of Labor and Employment or
his/her authorized representative. Failure to produce such
a written contract upon due demand by the Secretary or
his/her authorized representative or upon issuance of a
subpoena duces tecum by the National Labor Relations
Commission (NLRC) shall give rise to the presumption that
the arrangement is for an indefinite period.”

SEC. 7. Ratio between employees for an indefinite and a
definite period. — Article 160 shall read as follows:


“Article 160. Ratio between employees for an
indefinite and a definite period. — In no case shall the
number of employees under contracts for definite period
exceed thirty percent (30%) of the total number of rank-
and-file employees. A violation of this provision shall result
in the automatic conversion of all such arrangements into
contracts for an indefinite period.”

SEC. 8. Rights and privileges of an employee for a definite or
indefinite period. ~ Article 161 shall read as follows:

“Article 161. Rights and privileges of an employee for a
definite or indefinite period. — An employee for a definite or
indefinite period shall have the following rights and
privileges:

(a) safe and healthful working conditions;

(b) _ labor standards, such as service incentive leave,
rest days, overtime pay, holiday pay, and 13" month pay;
(c) social security and welfare benefits; and
(d)__self-organization, collective bargaining, and
peaceful concerted action.

In addition, the Bureau of Internal Revenue (BIR)
shall, in appropriate revenue regulations, grant employees
for a definite period a privileged personal income tax
exemption, which shall be higher than those provided in
each income bracket based on existing schedules.”

SEC. 9. Probationary status; nature.- Article 162 shall read as
follows:

“Article 162. Probationary status; nature. - A
contract of employment may Stipulate a probationary
period to test the skills or abilities of a prospective
employee for a definite or indefinite period. A probationary
employee may be terminated for the following reasons: (a)
just or authorized cause under Book VI; or (b) when the
probationary employee fails to qualify as an employee for a
definite or indefinite period in accordance with reasonable
standards made known by the employer at the time of
engagement.”

SEC.10. Probationary status; periods. - Article 163 shall be
read as follows:

‘Article 163. Probationary status; periods. - The
duration of probationary employment varies according to
the annual gross basic salary of the probationary
employee.


For employees with an annual gross basic salary
below One Hundred Twenty Thousand Pesos
(P 120,000.00), the probationary period shall not exceed
three (3) months. Employees with an annual gross basic
salary of One Hundred Twenty Thousand Pesos
(P120,000.00) the probationary period may exceed three
(3) months but shall not be more than one (1) year.

The probationary period of professors, instructors,
and teachers shall be subject to law and standards
established by the Department of Education (DepEd) and
the Commission on Higher Education (CHED).

For the purpose of this Act, ‘basic salary” shall refer
to all remunerations or earnings paid by an employer for
services rendered, but shall not include allowances and
monetary benefits which are not considered or integrated
as part of the regular or basic salary, such as the
equivalent of unused vacation and sick leave credits,
overtime, premium, night differential and holiday pay, and
cost-of-living allowances.”

SEC.11. Non-diminution of status and benefits. — Article 164
shall read as follows:

“Article 164. Non-diminution of status and benefits.
— There shall be no demotion in rank or diminution of pay
or illegal dismissal of any person already employed upon
the effectivity of this Act. Henceforth, regular employees as.
defined under the former Article 280 of the Labor Code
shall be deemed under contracts for an indefinite period.”

SEC. 12. Recruitment and placement. - Article 165 shall read
as follows:

“Article 165. Recruitment and placement. - For
purposes of hiring employees for definite and indefinite
periods, the services of private recruitment and placement
agencies (PRPAs) shall be made available in accordance
with DOLE rules and regulations.”

SEC. 13. Effects of illegal dismissal. Article 288 (formerly
Article 279) of the Labor Code is hereby amended to read as follows:

“Article 287. Effect of illegal dismissal. -— An
employee who is unjustly dismissed from work shall be
entitled to reinstatement without loss of seniority rights and
other privileges and to his full back wages, 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 not possible, the unjustly
dismissed employee engaged for an indefinite period shall
be entitled to separation pay in the amount of one (1)
month pay or at least one (1) month pay for every year of
service, whichever is higher. For employees engaged for a
definite period, the amount of separation pay shall be one
(1) month pay or the remaining basic salary for the
unexpired portion of the contract, whichever is higher.”

SEC. 14, Repealing clause. ~ The provisions of Articles 289 and
290 (formerly Articles 280 and 281) of the Labor Code are hereby
repealed accordingly. All laws, presidential decrees, executive orders,
presidential proclamations, rules and regulations or parts thereof
contrary to or inconsistent with this Act are hereby repealed or modified
accordingly.

SEC. 15. Renumbering and rules and regulations. - The
Department of Labor and Employment (DOLE) shall cause the
renumbering of affected provisions of the Labor Code, as amended. The
DOLE shall also promulgate the necessary rules and regulations to
implement the provisions of this Act.

SEC. 16. Separability clause. - If any part or provision of this
Act, or the application thereof to any person or circumstance, is held
invalid, the remaining provisions, or the application of such remaining
provisions or parts thereof to other persons or circumstances, shall not
be affected thereby.

SEC. 17. Effectivity. - This Act shall take effect after two (2)

weeks of publication in two (2) national newspapers of general
circulation.

Approved,