Republic of the Philippines
HOUSE OF REPRESENTATIVES
Batasang Pambansa, Quezon City

FIFTEENTH CONGRESS
First Regular Session

HOUSE BILL NO. 2885

INTRODUCED BY REP. JOSEPH VICTOR G. EJERCITO

EXPLANATORY NOTE

Section 3 Article XII of the Constitution states that, “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. This
measure 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.

The passage of this legislative measure is earnestly requested.

JOSEPH VICTOR G. EJERCITO


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Batasang Pambansa, Quezon City

FIFTEENTH CONGRESS
First Regular Session

House BrLLNo, 2885 _

INTRODUCED BY REP. JOSEPH VICTOR G. EJERCITO

AN ACT
EXPANDING THE LIABILITIES OF INDIRECT
EMPLOYERS IN JOB CONTRACTING, COVERING OTHER
BENEFITS 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 by the Senate and the House of Representatives of the
Philippines in Congress assembled:

SECTION 1. Article 106 of Presidential Decree 442, as amended, is
hereby further amended by adding a new 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 OR
SUBCONTRACTOR HAVE RENDERED AT LEAST ONE (1)
YEAR OF SERVICE TO THE SAME EMPLOYER, WHETHER OR
NOR 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 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 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.”

SEC 2. If any provision of this Act is held unconstitutional, other
provisions not affected thereby shall remain valid and binding.

SEC 3. All laws, presidential decrees, rules and regulations insofar as
they are inconsistent with this Act, are hereby repealed, amended or
modified accordingly.

SEC 4. 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,