THIRTE&NTH CXJNGRESS OF TNE ) 
RXP1113L1'C OF THE PHILIPPINES) 
FIRST REGULAR SESSION 
) 
is, /do. i T ; $ 2  
AN ACT 
RATIONALJZING THE SECI7RZTY OF TENURE: 0 
114 THE PRIVATE SECTOR, STRENGTHENING T 
PROHIBITING CONTRACTING-OUT OF WORK, AND FOR OTHER 
PURPOSES. 
The Cons%itution guarantoes t h e  r i g h t  of workingmen t o  
s e c u r i t y  of tenure. 
E x i s t i n g  labor Legislations seelr t o  
give meaning t o  it. 
I t  i s ,  however, unfortunate and p a t h e t i c  t h a t  smart 
employels have found a way out t o  
comply with what the Law 
had ordained by prevenCing an eiaployee from a t t a i n i n g  a 
regular 
s t a t u s :  
one, 
by 
preventing 
the 
employee 
frORi 
comp1.eting h i s  s i x  ( 6 )  months period of 
probation; 
the 
o t h e r ,  
by 
contracting-out 
the 
work 
t o  
the 
so-cal%ed 
independent contractors. 
Both schemes had l e g a l l y  evaaed the oiiiployee's prospect 
of a t t a i n i n g  h i s  regular s t a t u s ,  a1.bei.t having worlred. f o r  
several years w i t h  the employer. 
I t  is high time we put a stop t o  these pernicious and 
e v i l  schemes and give justice t o  the eniployees. k&w Q.thtn$ 
kmg &kpIB,~~WZ1L! 
Thus, under this b i l l ,  
an enipl.oyee 
i s  immediately 
e n t i t l e d  t o  security of tenure upon being h l r Q d .  H i s  service 
can not be abruptly cut short except for ~ i l u s e 6  allowed by 


- Paye 2 - 
the Labor Code. Arid, 
i f  the employer dismisses hiin before 
the completion of the one-year period, the employer becomes 
l i a b l e  t o  the payment of separation pay corresponding t o  t h e  
unfinished portion of the term. 
If, on tho other hand, the employer ailows the employee 
t o  continue f o r  more than a month a f t e r  t h e  lapsa. of t h s  
one-year term from h i r i n g ,  t h e  employee becomes regular or 
permanent. If dismissed i l l e g a l l y ,  he will be e n t i t l e d  t o  
the payment of backwages u n t i l  r e i n s t a t e d .  
Under the b i l l ,  labor-only contractiny w i l l  be limitad 
t o  purely contractual jobs t h a t  have no relevance with nor 
connected w i t h  the business 
of the employer 
as 
t o  be 
e n t i t l e d  t o  recognition. But, i f  t.he work contracted out is 
necessarily p a r t  of the employer's business I 
an employer-. 
employee 
Yelationship 
shaLl 
be 
deemed 
t o  
e x i s t ,  
t h e  
contractor being relegated t o  one a s  r e c r u i t e r  or procurer 
or' the job. 
M 


TNIRTEENTN CONGRESS OH THE ) 
REPUBLIC OF THE BNILIPPTNESl 
~ 
~ . _ ~  
~- 
FIRST REGULAR SESSION 
1 
-----+J 
S EMAT E 
1722 
S.B. No. 
__-_I___ 
. ...... ..~ 
Introduced by SENATOX ALFRED0 S .  LIP4 
AN ACT 
R A T I O N A L I Z I N G  THE SECURZTY OF 
TGMURB OF EMP1,OYEES 
T N  TRT 
PRIVAT5 
SECTOR, 
STRENGTHENING 
THEIR 
RIGHTS, 
PROHIBITING 
CONTRACTTFTG--OUT OF WORK, AND FOR OTIIER PURPOSES. 
Be 
it 
enacted 
by 
the 
Senate 
and 
the 
Nouse 
of 
Representative of the Philippines i n  Congress assembled: 
SilCTTON 1. This Act s h a l l  be lrnowia a s  the "Rationalized 
Security of Tenure A c t  o l  2004". 
SilCTION 2 .  Any provision of law, r u l e s  and regulations 
t o  the coctrary .notwithstanding, employees i n  the p r i v a t e  
sector who have rendered work. for a period of one (1) year, 
whether continuous or hrolien and regardless of 
any t h e  
i n t e r v a l  between them, sh.all be considered regular employees 
arid e n t i t l e d  t o  security of tenure as provided i n  Art. 279 
of P . D .  4 4 2  a s  amended, otherwise known as the Labor Code of 
the Philippines. 
SECTION 3. An employee who has rendered servicf? f o r  
.less than one (1.) year may not be terminated unless f o r  m y  
of t h e  causes specified under A r t i c l e s  292, 
283 or 284 of 
t h e  Labor Code; provided, however, t h a t  an employee who has 
not at.tained reguiar s t a t u s  b u t  .is termj.natod not for any of 
the s a i d  just. causes before completing h i s  one (I) year of 
service 
shal.: 
be 
e n t i t l e d  
t o  
separation 
b e n e f i t s  
corresponding t o  the remaining period necessary t o  COmplQte 
his one (1) year t o  a t t a i n  regular status. 
SECTTON 4 .  The period of s i x  ( 6 )  months provided f o r  i n  
A r t .  281 of the Labor Code is hereby increased t o  o m  (1) 
year. 
SECTION 5 .  'The period o f  one (1) year fixed i n  thi.s A c t  
s h l l  comprise t h e  duration of service rendered a f t e r  'the 
e f f e c t i v i t y  o f  this Act and s h a l l  exclude those rendered 
drior t h e r e t o  regardless of duration. 
SECTJON 
6. 
This; 
A c t  
s h a l l  not 
apply 
t.o 
domestic 
klslpers, 
apprentices, 
seafa.rsrs, 
project 
employees 
and 
r e t a i l  or service e n t e r p r i s e s  employing not r..ore than ten 
(IO) workers incl.uding the owner and the managers. 


- Page 2 - 
SECTION '7. This A c t  s h a l l  not cover eniployees who have 
attaiiied regular s t a t u s  or those whose probatiorl period of 
s i x  ( 6 )  months under 
P x t .  281 of the Labor Code are i n  
e f f e c t  upon t.ho e f f e c t i v i t y  of t h i s  A c t .  
SECTION 8 .  Upon 
the e f f e c t i v i t y  of 
this Act, 
1x0 
employer may contract out the work necessarily essexitial to 
o r  inherent i n  the nature, of i t s  business t o  labor-only 
contracting agencies; provided, however, t h a t  employers with 
ongoing contracts may be allowed t o  f i n i s h  t h e  term of such 
contracts hut not beyolid' one (I.) year from the e f f e c t i v i t y  
hereof; provided, . f u r t h e r ,  t h a t  t h e  employees 
I A R ~ S ~  
such 
arrangement 
s h a l l  be credi,ted with t h e  duration served 
duriilg t h e  e f f e c t i v i t y  of 
this Act 
f o r  the purpose of 
computing t h e  one (1) year p o i i o d  or: ser:.ise 
f o r  regular 
sta'tus; arid, provided, f i n a l l y ,  employers who continue t,o 
contract-out its work i n  v i o l a t i o n  of 
t h i s  Act s h a l l  ba 
considered as d i r e c t  einployers of t h e  s a i d  employees and 
s h a l l  be. j o i n t l y  and s e v e r a l l y  1iabl.e with t h e  Labor-only 
contractors f o r  a l l  compensation and rnonet3L-y b e n e f i t s  due 
t.he employees Under a l l  labor l e g i s l a t i o n s .  
SECTION 9 .  
This 
A c t  
s h a l l  
t a k e  
e f f e c t  upon 
its 
approval.