TWENTIETH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session
25 JUL-2 P4 -11
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SENATE 
S. No. 7
INTRODUCED BY SENATOR JV EJERCITO
AN ACT
STRENGTHENING THE SECURITY OF TENURE OF WORKERS IN THE PRIVATE 
SECTOR, AMENDING FOR THE PURPOSE ARTICLES 106, 107, 108, 109, AND 
294 OF PRESIDENTIAL DECREE NO. 442 OTHERWISE KNOWN AS THE LABOR 
CODE OF THE PHILIPPINES, AS AMENDED
EXPLANATORY NOTE
For as long as anyone can remember, the Filipino worker has always struggled to 
make his status of employment regular or permanent. Every single day, he or she goes 
to work, there is a constant threat of being removed or instantly terminated at will by 
employers. This is an ordinary day in a life of a contractual worker—filled with uncertainty 
and anxiety.
Somehow, some way, employers with no regards to the plight of workers seems 
to have circumvented the law in the name of profit and personal convenience. Short-term 
labor contracts have been the norm rather than the exception. Contractualization has 
become more prevalent than ever and has become not only a relief but an escape from 
responsibility.
Today and recent years, contractualization has hid itself in a new name: "ENDO". 
ENDO has infamously forced itself in the Philippine lexicology stands for "end of contract". 
For employers, it is a period of employment. From the viewpoint and standpoint of an
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employee or worker, it is borrowed time—a job with a death sentence.
This bill seeks not only to bring comfort to the minds and hearts of our workers 
and employees but most importantly, assure them that their rights to security of tenure 
are protected. Labor-only contracting shall be prohibited and those found in violation of 
such, shall be heavily fined and their licenses revoked.
To further this noble cause, the bill clarifies that regardless of employment status 
of an employee, his/her employment may only be terminated for a just or authorized 
cause. More so, it emphasizes that the expiration of service agreement between the 
principal and the contractor shall not be a valid cause for termination of employment.
This measure provides for stricter requirements before a license may be granted 
to a would-be legitimate contractor. A bond shall be required to be furnished and a higher 
paid-up capital must be invested by a contractor who must also only engage in a 
specialized job, work, or service.
Through this legislation, we aim not only to give protection to workers by 
strengthening their security of tenure. May this contribute to our fight against the 
injustices committed against workers and help alleviate them from poverty
In view of the foregoing, the passage of this bill is earnestly sought.
JV EJERCITO


TWENTIETH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session
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SENATE 
S. No.__7
25 JUL-2 P4:11
INTRODUCED BY SENATOR JV EJERCITO
AN ACT
STRENGTHENING THE SECURITY OF TENURE OF WORKERS IN THE PRIVATE 
SECTOR, AMENDING FOR THE PURPOSE ARTICLES 106, 107, 108, 109, AND 
294 OF PRESIDENTIAL DECREE NO. 442 OTHERWISE KNOWN AS THE LABOR 
CODE OF THE PHILIPPINES, AS AMENDED
Be it enacted by the Senate and House of Representatives of the Philippines in Congress 
assembled:
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Section 1. Short Title. - This Act shali be known as the "Security of Tenure Act". 
Sec. 2. Article 106 of the Labor Code is hereby amended as follows:
"Art. 106. [Contractor—er—subcontractof.]
LEGITIMATE CONTRACTOR. - A LEGITIMATE 
CONTRACTOR REFERS TO ANY LICENSED PERSON 
OR ENTITY ENGAGED IN A LEGITIMATE 
CONTRACTING ARRANGEMENT PROVIDING 
SERVICES FOR A SPECIALIZED JOB OR 
UNDERTAKING UNDER A SERVICE AGREEMENT FOR 
A DEFINITE OR PREDETERMINED PERIOD, 
REGARDLESS SUCH WORK IS TO BE PERFORMED OR 
COMPLETED WITHIN OR OUTSIDE THE PREMISES 
OF THE PRINCIPAL.


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THE SECRETARY OF LABOR AND 
EMPLOYMENT, BASED ON THE RECOMMENDATION 
OF THE NATIONAL TRIPARTITE INDUSTRIAL PEACE 
COUNCIL (NTIPC), UNDER ART. 290 (C) OF THE 
LABOR CODE, AS AMENDED, SHALL DETERMINE BY 
APPROPRIATE REGULATIONS SPECIFIC 
ACTIVITIES WHICH MAY BE CONTRACTED OUT.
Whenever an employer enters into a contract with 
another person for the performance of the former's work, 
the employees of the LEGITIMATE 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 LEGITIMATE contractor [of 
subcontractor] fails to pay the wages AND OTHER WAGE- 
RELATED BENEFITS of his employees in accordance with 
this Code, the employer shall be jointly and severally liable 
with his LEGITIMATE 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, rostrict 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 os well os differentiations
within these typos 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.]


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[There is "labor-only" controcting whore the person
supplying workers to on employer does not have substantial
copitol or investment in the form of tools, equipment,
machineries, work promises, omong others, and the
workers recruited and—plocod—by such—person are
performing activities which ore directly roiotod to the
principal business of such employer. In such cases, the
person or intermediary shall bo considered merely as an
agent of the employer who shall bo responsible to the
workers in the same manner and extent as if the latter wore
directly employed by him.]"
Sec. 3. A new article. Article 106-A, is hereby inserted after Article 106, to read as
follows:
"ART. 106-A. CONDITIONS OF LEGITIMATE 
CONTRACTING. CONTRACTING ALLOWED UNDER 
THE PRECEDING ARTICLE SHALL BE DONE ONLY IF 
THE PERSON OR ENTITY ACTING AS CONTRACTOR 
OBTAINS A LICENSE FROM THE DEPARTMENT OF 
LABOR AND EMPLOYMENT (DOLE) AND ONLY IF IT 
PERFORMS A JOB, WORK, OR SERVICE IDENTIFIED 
BY THE SECRETARY OF LABOR AND EMPLOYMENT, 
BASED ON THE RECOMMENDATION OF THE 
NATIONAL TRIPARTITE INDUSTRIAL PEACE 
COUNCIL (NTIPC), UNDER ART. 290 (C) OF THE 
LABOR CODE, AS AMENDED.
SUCH LICENSE SHALL BE ISSUED AND 
MAINTAINED ONLY IF THE APPLICANT:
A. HAS A PAID-UP CAPITAL OF AT LEAST TEN 
MILLION PESOS (P10,000,000.00), WHICH 
MAY BE INCREASED BY THE SECRETARY OF


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LABOR AND EMPLOYMENT AS DEEMED 
APPROPRIATE THROUGH TRIPARTITE 
CONSULTATION;
B. ENGAGES IN AN IDENTIFIED SPECIALIZED 
JOB, WORK, OR SERVICE WHICH ARE NOT 
DIRECTLY RELATED TO THE MAIN BUSINESS 
OF THE PRINCIPAL;
C. FURNISHES A BOND UNDER ARTICLE 108 OF 
THIS CODE EQUAL TO TWENTY-FIVE 
PERCENT (25%) OF THE TOTAL CONTRACT 
COST; AND
D. PAYS A LICENSE FEE OF FIFTY THOUSAND 
PESOS (P50,000.00), WHICH MAY BE 
INCREASED BY THE SECRETARY OF LABOR 
AND EMPLOYMENT AS DEEMED 
APPROPRIATE THROUGH TRIPARTITE 
CONSULTATION;
THE LICENSE SHALL BE VALID FOR A PERIOD OF 
TWO (2) YEARS AND MAY BE RENEWED UPON 
COMPLIANCE WITH THE REQUIREMENTS 
PRESCRIBED AND OTHER REQUIREMENTS AS MAY 
BE DETERMINED BY THE DOLE. PROVIDED, THAT 
THE JOB, WORK, OR SERVICE TO BE PERFORMED 
CONTINUES TO BE DETERMINED BY THE 
SECRETARY OF LABOR AND EMPLOYMENT AS VALID 
FOR CONTRACTING, BASED ON THE 
RECOMMENDATION OF THE NATIONAL TRIPARTITE 
INDUSTRIAL PEACE COUNCIL (NTIPC)."
Sec. 4. Article 107 of the Labor Code is hereby deieted and replaced as follows:
"ART. 107. ABSOLUTE PROHIBITION AGAINST


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LABOR-ONLY CONTRACTING. THERE IS LABOR- 
ONLY CONTRACTING WHEN THE CONTRACTOR 
MERELY RECRUITS, SUPPLIES, OR PLACES 
WORKERS TO PERFORM A JOB OR WORK FOR A 
PRINCIPAL.
LABOR-ONLY CONTRACTING, WHICH IS 
TOTALLY PROHIBITED, REFERS TO AN 
ARRANGEMENT WHERE:
1. a. THE CONTRACTOR DOES NOT HAVE 
SUBSTANTIAL CAPITAL, OR
b. THE CONTRACTOR DOES NOT HAVE
INVESTEMENTS IN THE FORM OF TOOLS, 
EQUIPMENT, 
MACHINERIES,
SUPERVISION, WORK PREMISES, 
AMONG OTHERS, AND
c. THE CONTRACTOR'S EMPLOYEES 
RECRUITED AND PLACED ARE 
PERFORMING ACTIVITIES WHICH ARE 
DIRECTLY RELATED TO THE MAIN 
BUSINESS OPERATION OF THE 
PRINCIPAL; OR
2. THE CONTRACTOR DOES NOT EXERCISE THE 
RIGHT TO CONTROL OVER THE 
PERFORMANCE OF THE WORK OF THE 
EMPLOYEE.
THE LICENSE OF THE CONTRACTOR ENGAGED 
IN LABOR-ONLY CONTRACTING SHALL BE 
REVOKED. IN ADDITION, A FINE OF FIVE MILLION 
PESOS (P5,000,000.00) SHALL BE IMPOSED.


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PROPRIETORS, PARTNERS, OFFICERS, AND/OR 
DIRECTORS DIRECTLY OR INDIRECTLY 
RESPONSIBLE FOR THE COMMISSION OF LABOR- 
ONLY CONTRACTING SHALL BE PROHIBITED FROM 
FURTHER ENGAGING IN THE BUSINESS OF 
CONTRACTING."
Sec. 5. Article 108 of the Labor Code is hereby amended as foliows:
"Art. 108. Posting of bond. - [An omploycr or indirect 
omployor may] THE PRINCIPAL SHALL require the 
contractor [or subcontractor] to furnish a bond [equal to 
the cost of labor under contract] EQUAL TO TWENTY- 
FIVE PERCENT (25%) OF THE TOTAL CONTRACT 
COST, on condition that the bond will answer for the wages 
AND WAGE-RELATED BENEFITS due the employees 
should the contractor [or subcontractor, as the case may 
be,] fail to pay the same."
Sec. 6. Article 109 is hereby amended as follows:
"Art. 109. Solidary liabiiity. The provisions of existing 
iaws to the contrary notwithstanding, every PRINCIPAL 
[employer or indirect employer] shall be held responsible 
with his contractor [or subcontractor] for any violation of 
any provision of this Code. For purposes of determining the 
extent of their civii iiabiiity under this Chapter, they shali be 
considered as direct empioyers."
Sec. 7. Article 294 of the Labor Code is hereby amended as foilows:
"Art. 294. Security of tenure. [In cases of rcgulaf 
omploymont, the employer shall not terminate] [t]The 
services of an employee, IRRESPECTIVE OF 
EMPLOYMENT STATUS OR POSITION, SHALL NOT BE 
TERMINATED except for a just cause or when authorized


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by this Title. An employee who is unjustly dismissed from
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work shall be entitled to reinstatement without loss of
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seniority rights and other privileges and to his/HER full
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backwages, inclusive of allowances, and to his/HER other
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benefits or their monetary equivalent computed from the
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time his/HER compensation was withheld from him/HER
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up to the time of his actual reinstatement.
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THE MERE EXPIRATION OF THE SERVICE
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AGREEMENT UNDER ARTICLE 106 OF THIS CODE
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SHALL NOT BE DEEMED AS A TERMINATION OF
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EMPLOYMENT OF THE CONTRACTOR'S EMPLOYEES
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WHO ARE REGULAR EMPLOYEES OF THE LATTER.
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Sec. 8. Separability Clause. - If any portion or provision of this Act is declared
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unconstitutional, the remainder of this Act or any provisions not affected thereby shall
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remain in force and effect.
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Sec. 9. Repealing Clause. - Any law, presidential decree or issuance, executive
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order, letter of instruction, rule or regulation inconsistent with the provisions of this Act
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is hereby repealed or modified accordingly.
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Sec. 10. Effectivity. - This Act shall take effect fifteen (15) days after its publication
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in the Official Gazette or in a newspaper of general circulation.
Approved,