"7 
14" Congress of the Republic 
) 
( 
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of the Philippines 
1 
1st Regular Session 
1 
~~~~~~~~ 
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S E N A T E  
Introduced by Senator Aqnilino Q. Pimentel, Jr. 
EXPLANATORY NOTE 
The mandate of the constitution, under Art. XIII, Sec. 3, is clear "The state 
shall afford full protection to labor, local and overseas, organized, and promote 
full employment and equality of employment opportunities for all." 
This bill seeks to amend Article 106 of Presidential Decree 442, as 
amended, otherwise known as the Labor Code of the Philippines. 
The bill mandates indirect employers to ensure that all benefits of 
employees hired through job contractors are paid. 
If the employees cannot get their benefits from their agencies, they can 
turn to the company for relief. 
Its passage is earnestly requested. 
AQUILINO Q. PIMENTEL, JR. 


13th Congress of the Republic 
) 
of the Philippines 
) 
First Regular Session 
1 
S E N A T E  
Introduced by Senator Aquilino Q. Pimentel, Jr. 
AN ACT 
EXPANDING THE LIABILITIES OF INDIRECT EMPLOYERS IN JOB 
CONTRACTING, 
COVERING 
OTHER 
BENEDITS 
DUE 
THEIR 
EMPLOYEES, FOR THIS PURPOSE AMENDING ARTICLE 106 OF 
PRESIDENTIAL DECREE 442, AS AMENDED, OTHERWISE KNOWN AS 
THE LABOR CODE OF THE PHILIPPINES 
Be it enacted bil the Senate and House of Repuesentah’ves of the Philippines in 
Connvess 
. 
assembled: 
SECTION 1. Article 106 of Presidential Decree 442, as amended is hereby 
further amended by adding a paragraph, to read 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. 


IF THE EMPLOYEES OF THE CONTRACTOR OF 
SUBCONTRACTOR HAVE RENDERED AT LEAST ONE YEAR 
OF SERVICE TO THE SAME EMPLOYER, WHETHER OR NOT 
SUCH EMPLOYMENT IS CONTINUOUS, SUCH EMPLOYER 
SHALL ALSO BE JOINTLY AND SEVERALLY BE LIABLE WITH 
THE 
CONTRACTOR 
OR 
SUBCONTRACTOR FOR 
THE 
PAYMENT OF THE EMPLOYEES’ BENEFITS, INCLUDING, BUT 
NOT LIMITED TO THEIR SEPARATION OR RETIREMENT 
BENEFITS, PROVIDED, THAT THE LIABILITY OF THE 
INDIRECT EMPLOYER SHALL BE LIMITED ONLY TO THE 
PERIOD THAT SUCH EMPLOYEE RENDERED SERVICES TO 
THE SAID INDIRECT EMPLOYER, THE AVAILMENT AND 
GRANT OF SEPARATION, 
RETIREMENT AND 
OTHER 
BENEFITS SHALL BE IN ACCORDANCE WITH EXISTING 
LAWS. 
The Secretary of Labor may, by appropriate regulations, 
restrict of 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. 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 be placed 
by such persons 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.” 
SECTION 2. If any provision of this Act is held unconstitutional, other 
provisions not affected thereby shall remain valid and binding. 
SECTION 3. AI1 Iaws, presidential decrees, rules and regulations insofar 
as they are inconsistent with this Act, are hereby repealed, amended or modified 
accordingly. 
SECTION4. This Act shall take effect fifteen (15) days following its 
publication in the Official Gazette or two (2) newspapers of general circulation, 
whichever comes first. 
Approved,