Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

Seventeenth Congress
First Regular Session

House Bil’ No. 3802

Introduced by REP, MANUEL ANTONIO F,

EXPLANATORY NOTE

In a long line of decided cases

the Supreme Court has repeatedly struck down nefarious
practices on the part of some quarters in employing machinations and schemes designed to defeat
an employee's Constitutionally-guaranteed right to security of tenure and receive the rights and
benefits accorded to regular employment such as the right to self-organization and collective
bargaining. among others. ‘This Constitutional recognition and protection of an employee's right
to security of tenure is the legal grindstone upon which the most progressive pieces of labor
legislation has been honed

Nevertheless and as evidenced by the widespread use of labor contracting even for
activities directly related (0 the business of an employer, a large segment of the labor force has
been unduly deprived the legal benefits and protection accorded by regular employment. While
the detrimental effects of labor-only contracting upon workers” right to security of tenure has been,
largely arrested in the case of small contractors. the overly-restrictive definition of labor-only
contracting provided under prevailing laws has ironically resulted in the institutional denial of the
Constitutionally-guaranteed right to security of tenure to large swaths of workers employed in key
industries in the Philippines. While it has been widely argued that this present practice of

acceptable labor-only contracting” promotes widespread employment in the country, it is the
submission of this representation that any alleged economic benefit accorded by the “widespread
employment” provided by such practice is merely illusory or temporary as the workers whose
employment ceases upon the termination of their employment contraet of fixed short duration
(usually five months) eventually joins the pool of the unemployed.

In light of the declared policy and priority of the President to abolish any and all
machinations and schemes designed to defeat the Constitutionally-guaranteed right to security of
tenure of workers, this proposed legislation is intended to correct the deficiencies in existing laws
Which allowed the proliferation of measures whose primary purpose and intent is to prevent a
worker from attaining regular employment, However. this proposed legislation regfgnizes that
there remain cases and cireumstances where job contracting or service outsourejhg is legally-
permissible arid thus provides the legal framework for the valid practice thereof,

‘an be no true and
not accorded due:

{his proposed legislation is grounded upon the basic premise that there,
lasting national progress if the Filipino worker's right to security of tenure
recognition and protection under our laws,

-

Hence, support of this bill is earnestly sought

IANUEL ANTONIO F, ZUBIRI
ppresentafive
ird Distfict, Bukidnon,


Republic of the Philippines
HOUSE OF REPRESENTATIV
Quezon City

Seventeenth Congress
First Regular Session

3802

House Bill No.

Introduced by REP, MANUEL ANTONIO F, ZUBIRI

AN ACT

RENGTHENING WORKERS’ RIGHT TO SECURITY OF TENURE
PANDING THE SCOPE
AMENDING THE LABOR CODE OF THE PHILIPPINE

AND FOR OTHER PURPOSE

Be ir enacted by the Senate and the House of Representative of the Philippines in Congress
assembled.

as follor

SECTION 1. Short Title. This Act shall be known as the “Security of Tenure Act. of 2016."

SECTION 2. Labor-only contracting. Act 106 of the Labor Code shall be amended to read

Ww

“Art. 106. Contractor or sub-contractor.- 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 according with the
provisions of this Code.

In the event that the contractor or sub-contractor fails (0 pay the wages of his
employees in according with this Code, the employer shall be jointly and severally 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 tight of workers established under this
Code. In so prohibiting or restricting, he may make appropriate distinctions between labor=
only contracting’as well as differentiation within these types of contracting, and determine
who among the parties involved shall be consideration the employer for purpose 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 investment in the form of tools, equipment. machinery,
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
or where an employer reserves the right to control not only the end to be achieved by
such activities, but also the manner and means to be used by the worker of the
contractor or sub-contractor in reaching that end, notwithstanding any substantial
investment on the part of such contractor or sub-contractor in the form of tools,
equipment, machineries, work premises, among others. 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 letter were directly
employed by him, There shall arise a disputable presumption of labor-only contracting



ctivities to be undertaken by the worker of the contractor or sub-contractor is
and iy undertaken within

ifthe a
directly related to the principal business of the employe:
the business or work premises of the employer.

[shall be unlawful for any employer, contractor, or sub-contractor to engage
in “labor-only” contracting. In addition to any penalties or other liabilities that may
be preseribed under this Code for its violation of the mandatory prohibition herein,
the employer, contractor, and_ sub-contractor _who_ violate this Section shall_be
solidarily liable to pay each affected _worker_an_indemnity of not_less_than
PhPS0,000.00 per worker, This indemnity shall be without prejudice to the liability
of the employer, contractor, and sub-contractor such other penalties and damages
that may be preseribed under this Code and other issuances.

as amended, otherwise known as the Labor

SECTION 3. Repealing Clause. - Art. PD 44.
Code of the Philippines. and all other acts, laws, rules and regulations are hereby: repealed,
modified. or amended accordingly.

ECTION 4. Separability Clause. - If any part, section or provision of this Act shall be
held invalid or unconstitutional, the other provisions shall not be affected thereby.

SECTION 5. Effeetivity Clause, - 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.