THIRTEENTH CONGRESS OF TH 
) 
First Regular Session 
1 
OF THE PHILIPPINES 
S E N A T E  
Introduced by Senator S. R. Osmeiia I l l  
EXPLANATORY NOTE 
The Constitution provides that the State should affirm “labor as a primary 
social economic force,” and that ”it shall protect the rights of workers and 
promote their welfare.” The Bill of Rights further assures workers, whether in the 
private or public sector, the right to form lawful unions and associations. 
However, despite these provisions safeguarding workers’ security of tenure, 
cases that violate it are rife. Current laws such as the Labor Code allow for 
significant loopholes that permit employers to commit anti-labor practices that 
infringe on this basic civil right, creating a non-humane and unjust working 
environment for thousands of Filipino workers. 
The usual violations include employers, forestalling their employees’ 
regularization status, through practices such as classifying the latter as “casual” 
or “renewal,” firing and hiring of personnel every six months, assessing 
employment contracts on a semi-annual basis, and hiring the services of 
employment agencies for labor-only contracting. When employees are not made 
regular or permanent, they are denied all the benefits that were supposed to 
have been granted them in the first place, such as the right to self-organization, 
forming and joining unions, and involvement in collective bargaining. 
The 
already-regular employees are likewise adversely affected, as they are not able 
to recruit potential members that could contribute to their bargaining position. 
’ 
This Bill therefore intends to amend important aspects and correct 
omissions or oversights in several portions of the Labor Code. It particularly 
cites the practice of employee rnisclassification as iJlegal and provides penalties 
for it, as well as rationalizes the laws on subcontracting and regular employment, 
with the end view of strengthening the basic right of workers to security of tenure. 
In view of the foregoing, early passage of this bill is earnestly requested. 
pr/ 
SERGIO OSMENA 111 
Senator 


THIRTEENTH CONGRESS OF THE REPU 
OF THE PHILIPPINES 
B 
Firsf Regular Session 
) 
A 
S E N A T E  
s. No. 
Introduced by Senator S. R. Osmeiia Ill 
AN ACT 
STRENGHTENING THE CONSTITUTIONAL RIGHT TO SECURITY OF 
TENURE 
Be it enacted by the Senate and the House of Representatives of the 
Philippines in Congress assembled: 
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SECTION 1. Short Title. -- This Act shall be known as the “Security of 
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Tenure Act of 2004.” 
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SECTION 2. Labor-only contracting. -- Art. 106 shall be amended to 
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read as follows: 
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“Art. 106. 
Contractor or sub-contractor.- 
Whenever an 
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employer enters into a contract with another person for the 
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performance of the former’s work, the employees of the contractor 
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and of the latter’s subcontractor, if any, shall be paid in accordance 
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with the provisions of this Code. 
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In the event that the contractor or sub-contractor fails to pay 
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the wages of his employees in accordance with this Code, the 
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employer shall be jointly and severally liable with his contractor or 
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sub-contractor to such employees to the extent of the work 
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performed under the contract, in the same manner and extent that 
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he is liable to employees directly employed by him. 
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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 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 considered the employer for purposes 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 capital [or] AND 
investment in the form of tools, equipment, machinery, work 
practices, 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 THE 
PRINCIPAL EMPLOYER HAS THE RIGHT OF CONTROL OVER 
MEANS 
BY 
WHICH 
THE 
PURPORTED 
AGENCY 
OR 
CONTRACTUAL EMPLOYEE PERFORMS THE ACTIVITIES, 
NOTWITHSTANDING THE FACT THAT THE AGENCY OR 
CONTRACTOR 
HAS 
SUBSTANTIAL 
CAPITAL 
AND/OR 
INVESTMENT IN THE 
FORM OF TOOLS, EQUIPMENT, 
MACHINERY, 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 latter were directly employed 
by SUCH PRINCIPAL EMPLOYER. 
IN THE PERFORMANCE OF ITS JOB, THE LEGITIMATE 
SUBCONTRACTOR MUST USE ITS EQUIPMENT, FACILITIES, 
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MACHINERY, AND TOOLS AND CANNOT RELY ON THE 
P RI NC I PAL 
CONTRACTOR. 
THE 
USE 
OF 
THE 
SUBCONTRACTOR 
OF 
THE 
EQUIPMENT, 
FACILITIES, 
MACHINERY AND 
TOOLS 
OF THE 
PRINCIPAL IS 
AN 
INDICATION 
THAT 
THE 
SUBCONTRACTOR 
HAS 
NO 
SUBSTANTIAL CAPITAL AND INVESTMENT. 
THE EMPLOYER AND THE LABOR-ONLY CONTRACTOR 
OR SUBCONTRACTOR WHO VIOLATE THE FOREGOING 
PROVISION SHALL BE SOLIDARY LIABLE TO PAY INDEMNITY 
OF NO LESS THAN P50,OOO.OO TO EACH EMPLOYEE UNDER 
THE LABOR-ONLY CONTRACTOR OR SUBCONTRACTOR, 
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WITHOUT PREJUDICE TO THE OTHER MONETARY AWARDS 
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SUCH AS BACK WAGES, MONETARY CLAIMS, AND CBA 
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BENEFITS. 
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“Art. 280. Regular and Casual Employment; Penalty 
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in Case of Violation-The 
provisions of written contract to the 
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contrary notwithstanding and regardless of the oral agreement of 
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the parties, an employee shall be deemed to be regular where the 
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employee has been engaged to perform activities which are usually 
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necessary and desirable in the usual trade or business of the 
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employer, except where the employment has been fixed for a 
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specific project or undertaking the completion or termination of 
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which has been determined at the time of engagement of the 
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employee, or where the work or services to be performed is 
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seasonal in nature and the employment is for the duration of the 
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season. 
SECTION 3. Lawful classification of regular employment. -- Art. 280 
of the Labor Code shall be amended as follows: 
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SEASONAL AND PROJECT EMPLOYEES SHALL HAVE 
THE RIGHT TO SECURITY OF TENURE, SUBJECT TO THE 
PROVISIONS ON PROBATIONARY EMPLOYMENT, AND ARE 
ENTITLED TO RESUME THEIR EMPLOYMENT IN THE SAME 
OR SIMILAR POSITION UPON THE START OF THE NEXT 
SEASON OR PROJECT, AS THE CASE MAY BE; PROVIDED 
THAT, DURING THE TIME THAT THEIR SERVICES ARE NOT 
ACTUALLY AVAILED OF BY THE ESTABLISHMENT, THEY 
SHALL BE CONSIDERED TO 
BE AUTHORIZED 
LEAVE 
WITHOUT PAY. 
An employment shall be deemed to be casual if it is not 
covered by the preceding paragraph. 
[Provided, That any 
employee who has rendered at least one year of service, whether 
such service is continuous or broken, shall be considered a regular 
employee with respect to the activity in which he is employed and 
his employment and his employment shall continue while such 
activity exists.] 
CASUAL EMPLOYMENT SHALL HAVE THE 
RIGHT TO SECURITY OF TENURE AND MAY BE TERMINATED 
ONLY FOR JUST OR AUTHORIZED CAUSES. 
HOWEVER, 
THEIR POSITION, NOT BEING NECESSARY OR DESIRABLE TO 
THE USUAL TRADE OR BUSINESS OF THE EMPLOYER, MAY 
BE ELIMINATED IF THE SERVICES ATTACHED THERETO ARE 
NO LONGER AVALIED OF BY THE EMPLOYER. PROVIDED 
THAT IF THE POSITION HAS BEEN IN EXISTENCE FOR MORE 
THAN ONE YEAR, IT SHALL BE CONSIDERED AS REGULAR IN 
NATURE, SUBJECT TO THE PROVISIONS ON PROBATIONARY 
EMPLOYMENT. 
TERMINATION WILL THEN BE ALLOWED 
ONLY IF THERE IS JUST OR AUTHORIZED CAUSE. 
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THE PRINCIPAL EMPLOYER MUST DIRECTLY HIRE 
WORKERS WHO ARE PERFORMING ACTIVITIES WHICH ARE 
USUALLY NECESSARY OR DESIRABLE TO THE USUAL TRADE 
OR BUSINESS OF THE EMPLOYER, WITHOUT PREJUDICE TO 
THEIR PROPER CLASSIFICATION AS REGULAR, SEASONAL, 
PROJECT, OR 
EMPLOYEES 
HIRED 
FOR 
A 
SPECIFIC 
UNDERTAKING, 
AS 
PROVIDED 
FOR 
IN 
THE 
FIRST 
PARAGRAPH. 
THE PRINCIPAL EMPLOYER CANNOT HIRE 
THROUGH SUBCONTRACTORS, LABOR CONTRACTORS, OR 
OTHER SIMILAR AGENCIES AND “MANPOWER” SERVICE 
PROVIDERS, WORKERS PERFORMING ACTIVITIES WHICH 
ARE USUALLY NECESSARY OR DESIRABLE TO THE USUAL 
TRADE OR BUSINESS OF THE EMPLOYER, REGARDLESS OF 
THE AMOUNT OF INVESTMENT AND CAPITAL OF THE 
SUBCONTRACTOR OR LABOR CONTRACTOR. 
LIKEWISE, IN NO CASE SHALL REGULAR EMPLOYMENT 
BE 
SUBJECT 
TO 
A 
TERM, 
EXCEPT 
WHERE 
THE 
EMPLOYMENT HAS BEEN FIXED FOR A SPECIFIC PROJECT 
OR UNDERTAKING, THE COMPLETION OR TERMINATION OF 
WHICH 
HAS 
BEEN 
DETERMINED 
AT 
THE 
TIME 
OF 
ENGAGEMENT OF THE EMPLOYEE, OR WHERE THE WORK 
OR SERVICE TO BE PERFORMED IS SEASONAL IN NATURE 
AND THE EMPLOYMENT IS FOR THE DURATION OF THE 
SEASON SUBJECT TO PARAGRAPH 2 HEREOF. 
HOWEVER, TERM EMPLOYMENT SHALL BE ALLOWED 
FOR OVERSEAS FILIPINO WORKERS, SHOULD THE VALID 
CONTRACT OF EMPLOYMENT SO PROVIDED FOR A TERM. 
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EMPLOYEES WHO ARE REGULAR, REGARDLESS OF 
THE ORAL OR WRITTEN AGREEMENTS TO THE CONTRARY, 
SHALL BE CONSIDERED PART OF THE APPROPRIATE 
COLLECTIVE BARGAINING UNIT AND MAY EXERCISE THE 
RIGHT 
TO 
SELF-ORGANIZATION 
AND 
COLLECTIVE 
BARGAINING. 
AN EMPLOYER WHO VIOLATES THE FOREGOING 
SHALL BE LIABLE TO PAY AN INDEMNITY OF P50,OOO.OO TO 
EACH EMPLOYEE, WITHOUT PREJUDICE TO THE OTHER 
MONETARY CLAIMS, AND CBA BENEFITS. 
SECTION 4. Non-recognition of regular status as unfair labor 
practice. -- Art. 248 (Unfair practices of employers) shall be amended as 
follows: 
“Art. 248. Unfair labor practices of employers.- 
It shall be 
unlawful for an employer to commit any of the following unfair labor 
practices: 
(a) 
To interfere with, restrain or coerce employees in the 
exercise of their right to self-organization; 
(b) 
To require as a condition for employment that a 
person or an employee shall not join a labor organization or shall 
withdraw from one to which he belongs; 
(c) 
To contract out services or functions being performed 
by union when such will interfere with, restrain or coerce 
employees in the exercise of their right to self-organization; 
(d) 
To initiate, dominate, assist or otherwise interfere with 
the formation or administration of any labor organization, including 
the giving of financial or other support to it or its organizers or 
officers ; 
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(e) 
To discriminate in regard to hire or tenure of 
employment or any term or condition of employment in order to 
encourage or discourage membership in any labor organization. 
Nothing in this Code or in any other law shall prevent the parties 
from requiring membership in a recognized collective bargaining 
agent as a condition for employment, except of those employees 
who are already members of another union at the time of the 
bargaining unit who are not members of the recognized collective 
bargaining agent may be assessed a reasonable fee equivalent to 
the dues and other fees paid by members of the recognized 
bargaining agent, if such non-union members accept the benefits 
under the collective bargaining agreement. 
Provided, That the 
individual authorization required under Article 242, paragraph (o), 
of this Code shall not apply to non-members of the recognized 
collective bargaining agent; 
(f) 
To dismiss, discharge or otherwise prejudice or 
discriminate against an employee for having given or being about 
to give testimony under this Code; 
(9) 
To violate the duty to bargain collectively as 
prescribed by this Code; 
(h) 
To pay negotiation or attorney's fees to the union or 
its officers or agents as part of the settlement of any issue in 
collective bargaining 'or any other dispute; or 
(i) 
To violate a collective bargaining agreement. 
The provisions of the preceding paragraph notwithstanding, 
only the officers and agents of corporations, associations, or 
partnerships who have actually participated in, authorized or 
ratified unfair labor practices shall be held criminally liable. 
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(j) 
TO 
CLASSIFY AS 
CASUAL, 
CONTRACTUAL, 
SUBCONTRATOR’S 
OR 
LABOR-ONLY 
CONTRACTOR’S 
EMPLOYEES, AGENCY EMPLOYEES, AND OTHER NON- 
REGULAR 
WORKERS 
THOSE 
EMPLOYEES 
WHO 
ARE 
REGULAR EMPLOYEES BY VIRTUE OF THE ACTIVITIES THEY 
PERFORM AND OTHER CIRCUMSTANCES WHICH MAKE 
. 
THEIR EMPLOYMENT REGULAR. 
SECTION 5. Repealing Clause. -Art. 
PD 442, as amended, otherwise 
known as the Labor Code of the Philippines, and all other acts, laws, rules and 
regulations are hereby repealed, modified, or amended accordingly. 
SECTION 6. 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 7. Effectivity 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, 
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