EIGHTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session
Senate
of tl)e ^rcrftnrp
SENATE
S. No. 1499
20 HUY -V P4 «2
Introduced by Senator Grace Poe
RECEIVF.D Bv
AN ACT
ERADICATING ABUSIVE CONTRACTUALIZATION PRACTICES AND 
PENALIZING EMPLOYERS AND CONTRACTORS WHO COMMIT SUCH 
ABUSES, AMENDING FOR THIS PURPOSE BOOK THREE, TITLE TWO AND 
BOOK SIX, TITLE I OF PRESIDENTIAL DECREE NO. 442, OTHERWISE 
KNOWN AS THE LABOR CODE OF THE PHILIPPINES, AS AMENDED
Explanatory Note
Several provisions of the 1987 Philippine Constitution safeguard the rights of 
laborers. The most unequivocal of these provisions is Article XIII, Section 3, which 
states:
"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.
It shall guarantee the rights of all workers to self-organization, collective 
bargaining and negotiations, and peaceful concerted activities, including 
the right to strike in accordance with law. They shall be entitled to 
security of tenure, humane conditions of work, and a living wage. They 
shall also participate in policy and decision-making processes affecting 
their rights and benefits as may be provided by law ..."
Security of tenure is included among the rights of laborers and is 
operationalized in Article 279 of Presidential Decree No. 442, as amended, otherwise 
known as the Labor Code of the Philippines.


Contractualization is a perceived threat to a worker's right to security of 
tenure. Contractualization in the Philippine context has many meanings. On one 
hand, it can refer to the act of "subcontracting" under Articles 106 to 109 of the 
Labor Code.1 Under a subcontracting arrangement, "there exists a trilateral 
relationship under which there is a contract for a specific job, work or service 
between the principal and the contractor or subcontractor, and a contract of 
employment between the contractor or subcontractor and its workers." This form of 
contractualization emerged in the 1980's as a response of firms to globalization.2 It 
"allows establishments to reduce costs by concentrating on their core business and 
outsourcing non-core activities."3
On the other hand, contractualization can also refer to the wide spectrum of 
non-regular or irregular "precarious work", which can include "project-based", 
"seasonal", and "casual" employees. Other variants of non-regular work 
arrangements pertain to "job orders", "consultancies" and other forms of contractual 
arrangements which are purposefully designed to avoid or preempt the full 
application of security of tenure laws and the attendant benefits that flow from 
regular employment.
It is this latter category of contractualization which has been subject to 
manipulation and abuse, and which has manifested in our lingua franca as "Endo" or 
"5-5-5".4 "Endo" is the shortened version of "end of contract." It refers to the 
practice of ending contractual employments before the worker can be deemed a 
regular employee. In addition, "5-5-5," workers are made to work for only five 
months at a time.5
Endo is a highly abusive practice. First, the practice of repeated hiring for 5 
months at a time reduces their value as laborers, as substantial experience cannot
1 Del Rosario, R. and Resureccion, P.F. “Less than six months contract periods: is the retail industry 
circumventing the law? The Philippine case.” International Journal of Information Technology and Business 
Management 2012: Vol 7, No. 1. Retrieved from httD://www.iitbm.com/7th%20volume%20JITBM/pamela.pdf 
accessed 07/26/16.
2 Ibid.
3 Ibid.
4 Cristobal, M.A. and Resureccion, E. “De-Confusing Contractualization: Defining Employees Engaged in 
Precarious Work in the Philippines” Retrieved from http://pli.upd.edu.Dh/wp-content/uploads/2015/03/88-02-J- 
88B14-De-Confusing-Contractualization-vl.pdf Accessed 07/26/16.
5 Ibid.


be gained in a five month period. Second, such practice removes any possibility for 
career advancement.
This measure seeks to amend the Labor Code in order to address, if not 
wholly eradicate, Endo, an abusive and detrimental form of contractualization. This 
bill provides as follows:
1. Any employee engaged for a definite period of time, under a written 
contract specifying the rights, terms, and conditions of employment not 
lower than the minimum standard set by laws or regulations, shall not be 
deemed a regular employee upon the expiration of said contract;
2. Subsequent engagement under any arrangement, with or without a 
written contract, regardless of whether the employee was directly hired or 
through a contractor or third party, would automatically render the 
employment regular: (i) when the initial contract that expired was for a 
period of at least six (6) months and the work desirable to the business of 
the employer, or (ii) when the worker has accumulated an aggregate 
period of at least six (6) months for successive prior contracts or 
arrangements of shorter duration and the work is desirable to the business 
of the employer;
3. Subsequent engagement of the same employee shall deem the employee 
to have attained regular employment in the proper cases when the new 
employer is a different entity; provided, that the ownership of at least fifty 
percent (50%) of the total stockholding or other proprietary interest of the 
first and the subsequent entity belongs to one and the same juridical 
person or individual; or one employer exercises over the other employer 
complete control or domination of finances, policies, and business 
practices.
Immediate approval of this measure is sought.
GRACE POE


EIGHTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session
)
SENATE
S. No. 1499
Senate
(©ffttt o( tDc ^rcrctary
20 MAY P4X)2/
Introduced by Senator Grace Poe
RECEIVED S'/A
4-
AN ACT
ERADICATING ABUSIVE CONTRACTUALIZATION PRACTICES AND 
PENALIZING EMPLOYERS AND CONTRACTORS WHO COMMIT SUCH 
ABUSES, BY AMENDING FOR THIS PURPOSE BOOK THREE, TITLE TWO 
AND BOOK SIX, TITLE I OF PRESIDENTIAL DECREE NO. 442, OTHERWISE 
KNOWN AS THE LABOR CODE OF THE PHILIPPINES, AS AMENDED
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assembled:
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Section 1. Book III, Title II, Chapter III, Article 107 of the Labor Code, as 
amended, is hereby further amended as follows:
"ARTICLE 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 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 make appropriate distinctions between labor-only contracting and job 
contracting as well as differentiations with these types of contracting and


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determine who among the parties involved shall be considered the employer 
for purposes of this Code, to prevent any violation of 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, OR IF SUCH 
CAPITAL OR INVESTMENT BEARS NO DIRECT RELATION TO THE 
PERFORMANCE OF THE DESIRED ACTIVITIES BY THE EMPLOYEES 
SUPPLIED TO THE EMPLOYER and the workers recruited and placed by 
such person are performing activities which are [directly—retatcdj 
DESIRABLE 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.
Sec. 2. Book VI, Title I, Chapter III, of the Labor Code, as amended, is 
hereby amended by adding a new article as follows:
"ARTICLE 280-A. INITIAL AND SUBSEQUENT 
ENGAGEMENTS. - ANY EMPLOYEE ENGAGED FOR A DEFINITE 
PERIOD OF TIME, PROVIDED THAT SUCH ENGAGEMENT IS COVERED 
BY A WRITTEN CONTRACT OF EMPLOYMENT SPECIFYING THE 
RIGHTS, TERMS, AND CONDITIONS OF EMPLOYMENT NOT LOWER 
THAN THE MINIMUM STANDARD SET BY LAWS OR REGULATIONS, 
SHALL NOT BE DEEMED A REGULAR EMPLOYEE UPON THE 
EXPIRATION OF SAID CONTRACT.
"SUBSEQUENT ENGAGEMENT UNDER ANY ARRANGEMENT, 
WITH OR WITHOUT A WRITTEN CONTRACT, WOULD 
AUTOMATICALLY RENDER THE EMPLOYMENT REGULAR: (I) WHEN 
THE INITIAL CONTRACT THAT EXPIRED WAS FOR A PERIOD OF AT 
LEAST SIX (6) MONTHS, OR (II) WHEN THE WORKER HAS 
ACCUMULATED AN AGGREGATE PERIOD OF AT LEAST SIX (6) 
MONTHS FOR SUCCESSIVE PRIOR CONTRACTS OR ARRANGEMENTS 
OF SHORTER DURATION.


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"SUBSEQUENT ENGAGEMENT OF THE SAME EMPLOYEE SHALL 
BE DEEMED COVERED BY THE PRECEDING PARAGRAPH AND THE 
EMPLOYEE DEEMED TO HAVE ATTAINED REGULAR EMPLOYMENT IN 
THE PROPER CASES WHEN THE NEW EMPLOYER IS A DIFFERENT 
ENTITY; PROVIDED, THAT THE OWNERSHIP OF AT LEAST FIFTY 
PERCENT (50%) OF THE TOTAL STOCKHOLDING OR OTHER 
PROPRIETARY INTEREST OF THE FIRST AND THE SUBSEQUENT 
ENTITY BELONGS TO ONE AND THE SAME JURIDICAL PERSON OR 
INDIVIDUAL; OR ONE EMPLOYER EXERCISES OVER THE OTHER 
EMPLOYER COMPLETE CONTROL OR DOMINATION OF FINANCES, 
POLICIES AND BUSINESS PRACTICES.
"ARTICLE 280-B. PENALTIES FOR NON-COMPLIANCE. - AN 
EMPLOYER WHO FAILS TO IMPLEMENT THE PRECEDING 
PROVISION, OR WHO INTENDS TO CIRCUMVENT THE PRECEDING 
PARAGRAPH BY INDICATING OTHERWISE IN THEIR CONTRACT 
WITH THEIR EMPLOYEE SHALL BE PENALIZED BY A FINE OF FIFTY 
THOUSAND PESOS (P50,000) FOR THE FIRST OFFENSE; ONE 
HUNDRED THOUSAND PESOS (100,000) FOR THE SECOND OFFENSE, 
AND FVE HUNDRED THOUSAND PESOS (P500,00) FOR THE THIRD 
OFFENSE. IN ADDITION, THE EMPLOYER SHALL IMMEDIATELY 
REGULARIZE THE EMPLOYEE, OR IF THE REGULARIZATION IS NO 
LONGER FEASIBLE, PAY A SEPARATION FEE TO THE EMPLOYEE 
EQUIVALENT TO THE LATTER'S THREE MONTH'S SALARY."
Sec. 3. Rules and Regulations. — The Secretary of Labor and Employment 
shall promulgate the necessary implementing rules and regulations within one 
hundred and twenty (120) days from the effectivity of this Act.
Sec. 4. Repealing Clause. — All laws, decrees, rules, and regulations, or parts 
thereof, which are contrary to, or inconsistent with, this Act are hereby repealed or 
modified accordingly.
Sec. 5. Separability Clause. - If any clause, sentence, section or part of this 
Act shall be adjudged by a court of competent jurisdiction to be invalid, such 
judgment shall not affect, impair or invalidate the remainder of this Act, but shall be


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confined in its operation to the clause, sentence, paragraph, section, or part thereof 
directly involved in the controversy.
Sec. 6. EffectMty. - This Act shall take effect fifteen (15) days after its 
publication in the Official Gazette or in at least two (2) newspapers of general 
circulation.
Approved,