HOUSE 1 REPRESENTATIVES
RECEIVED
DATE: 3.0 hit 2046

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REGISTRATION UNIT
BILLS AND INDEX SERVICE

Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

SEVENTEENTH CONGRESS
First Regular Session

House Bill No. 55

Introduced by REP. KAKA BAG-AO

EXPLANATORY NOTE

No less than Section 18, Article II of the Philippine Constitutions affirms labor as a “primary
social economic force” and shall protect the rights of workers and promote their welfare.

Further, under Section 3, Article XIII of the Constitution, the State shall afford full protection
to labor, local and overseas, organized and unorganized, and promote full employment and
equality of employment opportunities for all. It also mandates that all workers be entitled to
security of tenure, humane conditions of work, and a living wage.

This constitutional policy was reiterated in Presidential Decree 442 which dectared that the
State shall afford protection to labor, promote full employment, ensure equal work
opportunities regardless of sex, race or creed and regulate the relations between workers
and employers.

Despite such State policy declarations on labor, our workers’ constitutional right of security
of tenure is still inadequately observed as evidenced by the current trend towards
contractualization and de-regularization happening all over the country. Workers settle for
intermittent and short-term employment affecting not only their ability to earn livelihood but
also their productivity and quality of work. Unfortunately, these incidents are apparently
considered as unfair labor practices which violate the right of workers to just and humane
employment terms and conditions, the right to self-organization, and the right to collective-
bargaining. The present proposal introduces the following innovations:

1, Trilateral relationship in a legitimate subcontracting among the principal,
subcontractor and contractual workers;

2. Definition of subcontracting which includes arrangements for a specific job,
work or service within a definite period regardless of whether such job, work
or service is to be performed or completed within or outside the premises of
the principal;


3. Entitlement of subcontracted employees to all rights and privileges due to
regular employees and the right to a written contract with a mandated terms
and conditions;

4. Expressed provisions on prohibition against labor-only subcontracting and
subcontracting arrangements;

5. Prohibition against principals who engage more than 20% of subcontracted
employees;

6. Mandatory registration of subcontractors;
7. _ Period for probationary employment is fixed at six (6) months;
8. Violation of contracting rules is considered an unfair labor practice;

9. Deliberate misclassification of employees for the purpose of misleading them
as to their rights is considered an unfair labor practice; and

10. Violation of contracting rules is penalized by a fine.

In sum, this proposal gives life to the constitutional provision on the right of all workers,
including contractual employees, to security of tenure. Hence, the early approval of this bill

is earnestly sought.
P. UE Nao

Lone District, Dinagat Islands


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

SEVENTEENTH CONGRESS
First Regular Session

59

House Bill No.

Introduced by REP. KAKA BAG-AO

AN ACT
STRENGTHENING THE SECURITY OF TENURE OF WORKERS IN THE PRIVATE
SECTOR, AMENDING FOR THE PURPOSE ARTICLES 248, 279, 280, 281 AND 288,
AND INTRODUCING NEW ARTICLES 106-A, 106-B, 106-C, 106-D, 106-E, 280-A AND
280-B TO PRESIDENTIAL DECREE NO. 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 the Labor Code is hereby repealed and substituted as follows:

“[ART. 106. Contractor of 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.

“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 and job contracting as well as differentiations within these types

1


‘SEC.2.

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 a ‘labor-only’ only contracting where the persons 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
placed by such persons and performing activities which are directly related to the
Principal business of such employer. In such cases, the persons or intermediary shalll 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. 1

“ART. 106. CONCEPT AND NATURE OF SUBCONTRACTING ARRANGEMENTS.
- IN LEGITIMATE SUBCONTRACTING, THERE EXISTS A TRILATERAL
RELATIONSHIP UNDER WHICH THERE IS A CONTRACT FOR A SPECIFIC JOB,
WORK OR SERVICE BETWEEN THE PRINCIPAL AND THE SUBCONTRACTOR,
AND A CONTRACT OF EMPLOYMENT BETWEEN THE SUBCONTRACTOR AND
ITS WORKERS. HENCE, THERE ARE THREE PARTIES INVOLVED IN THESE
ARRANGEMENTS: THE PRINCIPAL WHICH DECIDES TO FARM OUT A JOB OR
SERVICE TO A SUBCONTRACTOR WHICH HAS THE CAPACITY TO
INDEPENDENTLY UNDERTAKE AND ACTUALLY UNDERTAKES THE
PERFORMANCE OF THE JOB, WORK OR SERVICE, AND THE CONTRACTUAL
WORKERS ENGAGED BY THE SUBCONTRACTOR TO ACCOMPLISH THE JOB,
WORK OR SERVICE.

“FOR PURPOSES OF THIS CODE, ‘SUBCONTRACTING’ REFERS TO AN
ARRANGEMENT WHEREBY:

(A) A PRINCIPAL AGREES TO PUT OUT OR FARM OUT WITH A
SUBCONTRACTOR THE PERFORMANCE OR COMPLETION OF A SPECIFIC
JOB, WORK OR SERVICE WITHIN A DEFINITE OR PREDETERMINED
PERIOD; REGARDLESS OF WHETHER SUCH JOB, WORK OR SERVICE IS
TO BE PERFORMED OR COMPLETED WITHIN OR OUTSIDE THE PREMISES
OF THE PRINCIPAL; OR

(B) A PERSON, PARTNERSHIP, ASSOCIATION OR CORPORATION WHICH
NOT BEING A PRINCIPAL, CONTRACTS WITH A SUBCONTRACTOR FOR
THE PERFORMANCE OF ANY WORK, TASK, JOB OR PROJECT.”

— Anew Article 106-A is hereby inserted in the Labor Code to read as follows:

“ART. 106 — A. RIGHTS AND LIABILITIES OF PARTIES. — (A.) THE
SUBCONTRACTED EMPLOYEE. IN ALL CASES, SUBCONTRACTED EMPLOYEES


SHALL BE ENTITLED TO ALL RIGHTS AND PRIVILEGES DUE TO REGULAR
EMPLOYEES INCLUDING THE FOLLOWING:

F

SAFE AND HEALTHFUL WORKING CONDITIONS;

LABOR STANDARDS SUCH AS SERVICE INCENTIVE LEAVES, REST DAYS,
OVERTIME PAY, HOLIDAY PAY, THIRTEENTH MONTH PAY AND
SEPARATION PAY;

RETIREMENT BENEFITS;

SOCIAL SECURITY AND WELFARE BENEFITS;

‘SELF-ORGANIZATION, COLLECTIVE BARGAINING AND

‘SECURITY OF TENURE.

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Prep

“IN ADDITION, SUBCONTRACTED EMPLOYEES SHALL HAVE THE RIGHT TO A
WRITTEN CONTRACT WHICH SHALL INCLUDE THE FOLLOWING TERMS AND
CONDITION:

1. THE SPECIFIC DESCRIPTION OF THE JOB, WORK, OR SERVICE TO BE
PERFORMED BY THE CONTRACTUAL EMPLOYEE;

2. THE PLACE OF WORK AND TERMS AND CONDITIONS OF EMPLOYMENT,
INCLUDING A STATEMENT OF THE WAGE RATE APPLICABLE TO THE
INDIVIDUAL CONTRACTUAL EMPLOYEE;

3. THE TERM OR DURATION OF EMPLOYMENT WHICH SHALL BE CO-
EXTENSIVE WITH THE CONTRACT OF THE PRINCIPAL AND
SUBCONTRACTOR OR WITH THE SPECIFIC PHASE FOR WHICH THE
CONTRACTUAL EMPLOYEE IS ENGAGED, AS THE CASE MAY BE.

“THE SUBCONTRACTED EMPLOYEE SHALL BE INFORMED BY THE
SUBCONTRACTOR OF THE FOREGOING TERMS AND CONDITIONS ON OR
BEFORE THE FIRST DAY OF HIS EMPLOYMENT.

“(B.) THE PRINCIPAL AND THE SUBCONTRACTOR. THE LEGITIMATE
SUBCONTRACTOR SHALL BE CONSIDERED THE EMPLOYER OF THE
CONTRACTUAL EMPLOYEE FOR PURPOSES OF ENFORCING THE PROVISIONS
OF THE LABOR CODE AND OTHER SOCIAL LEGISLATION. IN ALL CASES OF
SUBCONTRACTING, HOWEVER, THE PRINCIPAL SHALL BE SOLIDARILY
LIABLE WITH THE CONTRACTOR IN THE EVENT OF ANY VIOLATION OF ANY
PROVISION OF THE LABOR CODE, INCLUDING THE FAILURE TO PAY WAGES.

“THE PRINCIPAL SHALL BE DEEMED THE EMPLOYER OF THE CONTRACTUAL
EMPLOYEE IN ANY OF THE FOLLOWING CASES:

I. WHERE THERE IS LABOR-ONLY CONTRACTING; OR


SEC.3.

TI. IN THE ABSENCE OF THE WRITTEN CONTRACT REQUIRED BY ARTICLE
106-A; OR
III. _IN CASES OF VIOLATION OF ARTICLE 106 — B.

“IN ADDITION, THE PRINCIPAL SHALL BE SOLIDARILY LIABLE WITH THE
SUBCONTRACTOR IN CASE THE CONTRACT BETWEEN THE PRINCIPAL AND
SUBCONTRACTOR IS PRE-TERMINATED FOR REASONS NOT ATTRIBUTABLE
TO THE FAULT OF THE SUBCONTRACTOR.”

— Anew Article 106-B is hereby inserted in the Labor Code to read as follows:

“ART. 106-B. PROHIBITION AGAINST LABOR-ONLY SUBCONTRACTING. —
ENGAGING IN LABOR-ONLY CONTRACTING OR CONTRACTING WITH A
LABOR-ONLY CONTRACTOR IS STRICTLY PROHIBITED. FOR THIS PURPOSES,
LABOR-ONLY CONTRACTING REFERS TO AN ARRANGEMENTS WHERE THE
SUBCONTRACTOR MERELY RECRUITS, SUPPLIES OR PLACES WORKERS TO
PERFORM A JOB, WORK OR SERVICE FOR A PRINCIPAL, INCLUDING
INSTANCES WHERE ANY OF THE FOLLOWING IS PRESENT:

(A) THE SUBCONTRACTOR DOES NOT HAVE SUBSTANTIAL CAPITAL AND
INVESTMENT WHICH RELATES TO THE JOB, WORK OR SERVICE TO BE
PERFORMED.

(B) THE EMPLOYEES RECRUITED, SUPPLIED OR PLACED BY SUCH
SUBCONTRACTOR ARE PERFORMING ACTIVITIES WHICH ARE DIRECTLY
RELATED TO THE USUAL BUSINESS OF THE PRINCIPAL; OR

(C) THE PRINCIPAL HAS THE RIGHT TO CONTROL, WHETHER EXERCISED OR
NOT, NOT ONLY THE END TO BE ACHIEVED, BUT ALSO THE MANNER AND
MEANS TO BE USED IN REACHING THAT END.

“AS USED IN THIS CODE, ‘SUBSTANTIAL CAPITAL AND INVESTMENT’ IN
SUBCONTRACTING ARRANGEMENTS REFERS TO TOOLS, EQUIPMENTS,
IMPLEMENTS, MACHINERIES AND WORK PREMISES ACTUALLY AND
DIRECTLY USED BY THE SUBCONTRACTOR IN THE PERFORMANCE OR
COMPLETION OF THE JOB, WORK OR SERVICE CONTRACTED OUT. THE USE
OF THE SUBCONTRACTOR OF THE EQUIPMENT, FACILITIES, MACHINERIES
AND TOOLS OF THE PRINCIPAL IS AN INDICATION THAT THE
SUBCONTRACTOR HAS NO SUBSTANTIAL CAPITAL AND INVESTMENT. THE
EXISTENCE OF CAPITAL STOCKS AND SUBSCRIBED CAPITALIZATION IN
RELATION TO CORPORATIONS ENGAGED IN SUBCONTRACTING DOES NOT
ITSELF CONSTITUTION SUBSTANTIAL CAPITAL AND INVESTMENT.


“AS USED IN THIS CODE, THE ‘RIGHT TO CONTROL’ IN SUBCONTRACTING
ARRANGEMENTS SHALL REFER TO THE RIGHT RESERVED TO THE PERSON
WHOM THE SERVICES OF THE CONTRACTUAL WORKERS ARE PERFORMED TO
DETERMINE NOT ONLY THE END TO BE ACHIEVED BUT ALSO THE MANNER
AND MEANS TO BE USED IN REACHING THAT END.”

‘SEC. 4. — A new Article 106-C is hereby inserted in the Labor Code to read as follows:

“ART. 106-C. PROHIBITIONS IN SUBCONTRACTING ARRANGEMENTS. —
REGARDLESS OF COMPLIANCE WITH THE IMMEDIATELY PRECEDING
ARTICLE , THE FOLLOWING ACTS SHALL BE PROHIBITED FOR BEING
CONTRARY TO LAW OR PUBLIC POLICY:

(A)

(B)

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(D)

ENGAGING OR MAINTANING BY THE PRINCIPAL OF SUBCONTRACTED
EMPLOYEES IN EXCESS OF TWENTY PERCENT (20%) OF THE
PRINCIPAL'S TOTAL WORKFORCE PROVIDED THAT SUCH
SUBCONTRACTED EMPLOYEES DO NOT PERFORM WORK THAT IS
NECESSARY OR DESIRABLE OR DIRECTLY RELATED TO THE USUAL
BUSINESS OR TRADE OR BUSINESS OF THE EMPLOYER.

CONTRACTING OUT OF A JOB, WORK OR SERVICE WHEN THE SAME
RESULTS IN THE TERMINATION OF REGULAR EMPLOYEES AND
REDUCTION OF WORK HOURS OR REDUCTION OR SPLITTING OF THE
BARGAINING UNIT;

CONTRACTING OUT OF WORK WITH A ‘CABO’. FOR THIS PURPOSE
‘CABO’ REFERS TO A PERSON OR GROUP OF PERSONS OR TO A LABOR
GROUP WHICH, IN THE GUISE OF A LABOR ORGANIZATION OR
COOPERATIVE, SUPPLIES WORKERS TO AN EMPLOYER WITH OR
WITHOUT ANY MONETARY OR OTHER CONSIDERATION, WHETHER IN
THE CAPACITY OF AN AGENT OF THE EMPLOYER, OR AS AN OSTENSIBLE
INDEPENDENT CONTRACTOR.

TAKING UNDUE ADVANTAGE OF THE ECONOMIC SITUATION OR LACK OF
BARGAINING STRENGHT OF THE CONTRACTUAL EMPLOYEE, OR
UNDERMINING HIS SECURITY OF TENURE OR BASIC RIGHTS, OR
CIRCUMVENTING THE PROVISIONS OF REGULAR EMPLOYMENT, IN ANY
OF THE FOLLOWING INSTANCES:

I. _IN ADDITION TO HIS ASSIGNED FUNCTIONS, REQUIRING THE
CONTRACTUAL EMPLOYEE TO PERFORM FUNCTIONS WHICH


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III.

ARE CURRENTLY BEING PERFORMED BY THE REGULAR
EMPLOYEES OF THE PRINCIPAL OR OF THE SUBCONTRACTOR;

REQUIRING HIM TO SIGN, AS A PRECONDITION TO
EMPLOYMENT OR CONTINUED EMPLOYMENT, AN ANTEDATED
RESIGNATION LETTER, A BLANK PAYROLL, A WAIVER OF LABOR
STANDARDS INCLUDING MINIMUM WAGES AND SOCIAL
WELFARE BENEFITS, OR A QUITCLAIM RELEASING THE
PRINCIPAL OR SUBCONTRACTOR FROM ANY LIABILITY AS TO
THE PAYMENT OF FUTURE CLAIMS; AND

REQUIRING HIM TO SIGN A CONTRACT FIXING THE PERIOD OF
EMPLOYMENT TO A TERM SHORTER THAN THE TERM OF THE
CONTRACT BETWEEN THE PRINCIPAL AND THE CONTRACTOR,
UNLESS THE LATTER CONTRACT IS DIVISIBLE INTO PHASES
FOR WHICH SUBSTANTIALLY DIFFERENT SKILLS ARE REQUIRED
AND THIS IS MADE KNOWN TO THE EMPLOYEE AT THE TIME OF
ENGAGEMENT.

(E) CONTRACTING OUT OF A JOB, WORK OR SERVICE THROUGH ANIN-
HOUSE AGENCY WHICH REFERS TO A:

(F)

(Ss)

is

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IIL.

SUBCONTRACTOR ENGAGED IN THE SUPPLY OF LABOR WHICH IS
OWNED, MANAGED AND CONTROLLED BY THE PRINCIPAL; OR

SUBCONTRACTOR IN WHICH THE PRINCIPAL OWNS OR
OTHERWISE REPRESENTS ANY SHARE OF STOCK; OR

SUBCONTRACTOR WHICH OPERATES SOLELY FOR THE
PRINCIPAL.

CONTRACTING OUT OF A JOB, WORK OR SERVICE THAT IS NECESSARY
AND DESIRABLE OR DIRECTLY RELATED TO THE BUSINESS OR
OPERATION OF THE PRINCIPAL;

CONTRACTING OUT OF A JOB, WORK OR SERVICE BEING PERFORMED
BY OR PREVIOUSLY PERFORMED BY REGULAR EMPLOYEES AND/OR
MEBERS OF THE BARGAINING UNIT.”


SEC. 5. — A new 106-D is hereby inserted in the Labor Code to read as follows:

“ART. 106 — D. REGISTRATION OF SUBCONTRACTOR. — (A.) MANDATORY
REGISTRATION. IT SHALL BE MANDATORY FOR ALL PERSONS OR ENTITIES
ACTING AS SUBCONTRACTORS TO REGISTER UNDER A REGISTRATION
HEREBY ESTABLISHED TO GOVERN CONTRACTING ARRANGEMENTS AND TO.
BE IMPLEMENTED BY THE REGIONAL OFFICES OF THE DEPARTMENT OF
LABOR AND EMPLOYMENT.

“NON-REGISTERED PERSONS OR ENTITIES ACTING AS SUBCONTRACTORS
SHALL BE DEEMED AS LABOR-ONLY CONTRACTORS. MERE REGISTRATION
WITHOUT A SHOWING OF COMPLIANCE WITH ALL REQUIREMENTS FOR
LEGITIMATE SUBCONTRACTING AND AVOIDANCE OF ALL PROHIBITIONS OF
SUBCONTRACTING SHALL NOT INDICATE LEGITIMATE SUBCONTRACTING.

“(B.) REQUIREMENTS FOR REGISTRATION. A SUBCONTRACTOR MAY BE
LISTED IN THE REGISTRY OF SUBCONTRACTORS UPON COMPLETION AND
SUBMISSION OF AN APPLICATION FORM PROVIDED BY THE DEPARTMENT.
IN THE APPLICATION FORM, THE APPLICANT SUBCONTRACTOR SHALL
PROVIDE THE FOLLOWING INFORMATION:

I. THE NAME AND BUSINESS ADDRESS OF THE APPLICANT AND THE
AREA OR AREAS WHERE IT SEEKS TO OPERATE;

II. THE NAMES AND ADDRESSES OF OFFICERS, IF THE APPLICANT IS A
CORPORATION PARTNERSHIP, COOPERATIVE OR UNION;

III. THE NATURE OF THE APPLICANT'S BUSINESS AND THE INDUSTRY OR
INDUSTRIES WHERE THE APPLICANT SEEKS TO OPERATE;

IV. THE NUMBER OF REGULAR WORKERS, THE LIST OF CLIENTS, IF ANY,
THE NUMBER OF PERSONNEL ASSIGNED TO EACH CLIENT, IF ANY,
AND THE SERVICES PROVIDED TO THE CLIENT;

V. THE DESCRIPTION OF THE PHASES OF THE CONTRACT AND THE
NUMBER O EMPLOYEES COVERED IN EACH PHASE, WHERE
APPROPIATE; AND

VI. A COPY OF AUDITED FINANCIAL STATEMENTS IF THE APPLICANT IS A
CORPORATION, PARTNERSHIP, COOPERATIVE OR A UNION, OR A
COPY OF THE LATEST INCOME TAX RETURN IF THE APPLICANT IS A
SOLE PROPRIETORSHIP.


“THE APPLICATION SHALL BE SUPPORTED BY THE FOLLOWING:

I. A CERTIFIED COPY OF A CERTIFICATE OF REGISTRATION OF FIRM OR
BUSINESS NAME FROM THE SECURITIES AND EXCHANGE
COMMISSION (SEC), DEPARTMENT OF TRADE AND INDUSTRY (DTI),
COOPERATIVE DEVELOPMENT AUTHORITY (CDA), OR FROM THE DOLE
IF THE APPLICANT IS A UNION; AND

II. A CERTIFIED COPY OF THE LICENSE OR BUSINESS PERMIT ISSUED BY
THE LOCAL GOVERNMENT UNIT OR UNITS WHERE THE
SUBCONTRACTOR OPERATES.

“THE APPLICATION SHALL BE VERIFIED AND SHALL INCLUDE AN
UNDERTAKING THAT THE SUBCONTRACTORS SHALL ABIDE BY ALL
APPLICABLE LABOR LAWS AND REGULATIONS.

“(C.) FILING AND PROCESSING OF APPLICATIONS. THE APPLICATION AND
ITS SUPPORING DOCUMENTS SHALL BE FILED IN TRIPLICATE IN THE
REGIONAL OFFICES WHERE THE APPLICANT PRINCIPALLY OPERATES. NO
APPLICATION FOR REGISTRATION SHALL BE ACCEPTED UNLESS ALL THE
FOREGOING REQUIREMENTS ARE COMPLIED WITH. THE SUBCONTRACTOR
SHALL BE DEEMED REGISTERED UPON PAYMENT OF A REGISTRATION FEE TO
BE DETERMINED BY THE REGIONAL OFFICE.

“WHERE ALL THE SUPPORTING DOCUMENTS HAVE BEEN SUBMITTED, THE
REGIONAL OFFICE MAY DENY OR APPROVE THE APPLICATION WITHIN
SEVEN (7) WORKING DAYS AFTER ITS FILING.

“UPON REGISTRATION, THE REGIONAL OFFICE SHALL RETURN ONE SET OF
THE DULY-STAMPED APPLICATION DOCUMENTS TO THE APPLICANT, RETAIN
ONE SET FOR ITS FILE, AND TRANSMIT THE REMAINING SET TO THE BUREAU
OF LOCAL EMPLOYMENT. THE BUREAU SHALL DEVICE THE NECESSARY
FORMS FOR THE EXPEDITOUS PROCESSING OF ALL APPLICATIONS FOR
REGISTRATION.

“(D.) ANNUAL REPORTING OF REGISTERED CONTRACTORS. THE
SUBCONTRACTOR SHALL SUBMIT IN TRIPLICATED COPIES AN ANNUAL
REPORT USING A PRESCRIBED FORM TO THE APPROPRIATE REGIONAL
OFFICE NOT LATER THAN THE FIFTEENTH OF JANUARY OF THE FOLLOWING
YEAR. THE REPORT SHALL INCLUDE THE FOLLOWING DOCUMENTS:



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IIL.

A LIST OF CONTRACTS ENTERED WITH THE PRINCIPAL DURING THE
SUBJECT REPORTING PERIOD;

THE NUMBER OF WORKERS COVERED BY EACH CONTRACT WITH THE
PRINCIPAL;

A SWORN STATEMENT SIGNED BY THE HIGHEST EXECUTIVE OFFICER
AND THE CHIEF FINANCIAL OFFICER THAT THE SUBCONTRACTOR HAS
REMITTED ALL KINDS OF PAYMENTS AND PREMIUMS TO THE SOCIAL
SECURITY SYSTEM (SSS), THE HOME DEVELOPMENT MUTUAL FUND
(HDMF), PHILHEALTH, EMPLOYEES COMPENDATION COMMISSION
(ECC), AND THE BUREAU OF INTERNAL REVENUE (BIR) FOR ALL
CONTRACTUAL EMPLOYEES PERTAINING TO THE REPORTIN PERIOD.

“THE REGIONAL OFFICE SHALL RETURN ONE SET OF THE DULY-STAMPED
REPORT TO THE SUBCONTRACTOR, RETAIN ONE SET FOR ITS FILE, AND
TRANSMIT THE REMAINING SET TO THE BUREAU OF LOCAL EMPLOYMENT
WITHIN FIVE (5) DAYS FROM RECEIPT THEREOF.

“(E.) DELISTING OF CONTRACTORS OR SUBCONTRACTORS. THE REGIONAL
DIRECTOR SHALL CANCEL THE REGISTRATION OF SUBCONTRACTORS BASED
ON ANY OF THE FOLLOWING GROUNDS:

L

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IL.

NON-SUBMISSION OF CONTRACTS BETWEEN THE PRINCIPAL AND THE
SUBCONTRACTORS WHEN REQUIRED TO DO SO;

NON-SUBMISSION OF THE ANNUAL REPORT INCLUDING THE
DOCUMENTS LISTED UNDER ARTICLE 106 (D);

ENGAGEMENT IN LABOR-ONLY CONTRACTING;

IV. VIOLATION OF THE PROHIBITED ACTIVITIES PROVIDED BY THIS
CODE;

V. NON-COMPLIANCE WITH LABOR STANDARDS AND WORKING
CONDITIONS.

“(F.) RENEWAL OF REGISTI INTRACTORS. ALL REGISTERED

SUBCONTRACTORS MAY APPLY FOR RENEWAL OF REGISTRATION EVERY
TWO (2) YEARS. FOR THIS PURPOSE, THE TRIPARTITE INDUSTRIAL PEACE


SEC.6.

SEC. 7.

COUNCIL (TIPC) AS CREATED UNDER EXECUTIVE ORDER NO. 49, SHALL
SERVE AS THE OVERSIGHT COMMITTEE TO VERIFY AND MONITOR THE
FOLLOWING:

I. ENGAGING IN ALLOWABLE CONTRACTING ACTIVITIES; AND

II. COMPLIANCE WITH ADMINISTRATIVE REPORTING REQUIREMENTS;

— Anew Article 106-E is hereby inserted in the Labor Code to read as follows:

“ART. 106-E. DUTY TO PRODUCE COPY OF CONTRACT. — THE PRINCIPAL OR
SUBCONTRACTOR SHALL PRODUCE A COPY OF THE CONTRACT BETWEEN THE
PRINCIPAL AND THE CONTRACTOR IN THE COURSE OF INSPECTION. THE
SUBCONTRACTOR SHALL ALSO PRODUCE A COPY OF THE CONTRACT OF
EMPLOYMENT OF SUBCONTRACTED WORKERS WHEN DIRECTED TO DO SO
BY THE REGIONAL DIRECTOR OR HIS AUTHORIZED REPRESENTATIVE.

“A COPY OF THE CONTRACT BETWEEN THE SUBCONTRACTED EMPLOYEE AND
THE SUBCONTRACTOR SHALL BE FURNISHED TO THE CERTIFIED
BARGAINING AGENT, IF THERE IS ANY.

. — Article 248 of the Labor Code is hereby amended to read 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 exercises of their right to self-
organization;

(b) To require as a condition of employment that a person or an employee shall not join
a labor organization or shall withdraw from one to which he belongs;

(©) To ENGAGE A LABOR-ONLY CONTRACTOR OR TO contract out services,
function being performed by [union] MEMBERS OF, OR POSITION COVERED
BY, THE BARGAINING UNIT AND/OR REGULAR RANK-AND-FILE AND
SUPERVISORY EMPLOYEES [when such will interfere with, restrain or coerce
employees in the exercise of their rights 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 supporters;

10


(e) To discriminate in regard to wages, hours of work and other terms and conditions of
employment in order to encourage or discourage membership in any labor
organization. Nothing in this Code or in any other law shall stop the parties from
requiring membership in a recognized collective bargaining agent as a condition of
employment, except those employees who are already members of another union at
the time of the signing of the collective bargaining agreement.

Employees of an appropriate 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 collective 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 (0) of this Code shall not apply to the 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;

(g) 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 [..]; OR

() TO DENY THE EXISTENCE OF EMPLOYER-EMPLOYEE RELATIONSHIP
AND/OR TO CLASSIFY AS CASUAL, CONTRACTUAL, SUBCONTRACTED
EMPLOYEES, AGENCY EMPLOYEES, OR OTHER NON-REGULAR
CLASSIFICATION THOSE EMPLOYEES WHO ARE REGULAR EMPLOYEES BY
VIRTUE OF ARTICLE 280 OF THIS CODE.

“The provisions of the preceding paragraph notwithstanding, only the officer and agents
of corporation, associations or partnership who have actually participated in, authorized
r ratified unfair labor practices shall be held criminally liable.”

SEC. 8. — Article 279 of the Labor Code is hereby amended to read as follows:
“ART. 279. Security of Tenure. - [In cases of regular employment, the employer shall not
terminate the services of an employee] ALL EMPLOYERS SHALL ENJOY SECURITY OF
TENURE AND SHALL NOT BE TERMINATED except for a just cause or when authorized
by this Title, ALSO, THE RIGHT TO NOTICE IN EMPLOYMENT RELATIONS

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REQUIRES ANY EMPLOYER WHO SEEK TO DISMISS A WORKER TO FURNISH HIM
A WRITTEN NOTICE STATING THE PARTICULAR ACTS OR OMMISSIONS
CONSTITUTING THE GROUNDS FOR HIS DISMISSAL. IN CASES OF
ABANDONMENT OF WORK, THE WRITTEN NOTICE SHALL BE SERVED AT THE
WORKERS’ LAST KNOWN ADDRESS. DUE PROCESS ENTITLES THE WORKER AN
OPPORTUNITY TO ANSWER THE ALLEGATIONS STATED AGAINST HIM IN THE
NOTICE OF DISMISSAL WITHIN A PERIOD OF FIVE (5) CALENDAR DAYS FROM
RECEIPT OF SUCH NOTICE AND WITH THE ASSISTANCE OF A REPRESENTATIVE
IF HE SO DESIRES. THE RIGHT TO NOTICE REQUIRES THE EMPLOYER TO
AFFORD THE WORKER AMPLE OPPORTUNITY TO BE HEARD AND TO BE HEARD
AND TO DEFEND HIMSELF WITH THE ASSISTANCE OF HIS REPRESENTATIVE IF
HE SO DESIRES.

“An employee who is [unjustly] dismissed from work IN VIOLATION OF ANY OF HIS
RIGHTS UNDER THIS ARTICLE, INCLUDING THE RIGHT TO NOTICE AS
ELABORATED IN THE PRECEDING PARAGRAPH shall be entitled to IMMEDIATE
reinstatement without loss of seniority rights and other privileges and to his full back wages,
inclusive of allowances, and to his other benefits or their monetary equivalent computed
from the time his compendation was withheld from him up to time of his actual
reinstatement.”

SEC. 9. — Article 280 of the Labor Code is hereby amended to read as follows:

“ART. 280. Regular and Casual Employment. - The provisions of written agreement to the
contrary notwithstanding and regardless of the agreement of the parties, an employment
shall be deemed to be regular where the employee has been engaged to perform activities
which are usually necessary or desirable OR DIRECTLY RELATED TO the usual business
or trade of the employer [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 the engagement in nature and the employment is for the duration of the season].

“An employment shall be deemed to be casual if it is not USUALLY NECESSARY OR
DESIRABLE OR [covered by the preceding paragraph] RELATED TO THE USUAL
BUSINESS OF THE EMPLOYER: Frovided, 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 IN and his
employment shall continue [while such activity exists] UNLESS HE IS TERMINATED FOR
A JUST CAUSE OR WHEN AUTHORIZED BY THIS TITLE.”

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SEC. 10. — A new Article 280-A is hereby inserted in the Labor Code to read as follows:

“ART. 280-A. PROJECT, EXTRA AND SEASONAL EMPLOYMENT. — PROJECT
EMPLOYMENT REFERS TO THAT WICH HAS BEEN FIXED FOR A SPECIFIC
PROJECT OR UNDERTAKING THE COMPLETION OR TERMINATION OF WHICH
HAS BEEN DETERMINED AND MADE KNOWN TO THE EMPLOYEE AT THE TIME OF
HIS ENGAGEMENT.

“EXTRA EMPLOYMENT REFERS TO ADDITIONAL WORK TO BE PERFORMED IN
RESTAURANT AND HOTEL ESTABLISHMENTS SPECIFICALLY FOR BANQUET
FUNCTIONS, SEMINARS AND SIMILAR FUNCTIONS WHERE THE REGULAR
EMPLOYEES CANNOT REASONABLY COPE WITH THE INCREASED DEMANDS OF
SUCH EVENTS.

“SEASONAL EMPLOYMENT REFERS TO THE PERFORMANCES OF AGRICULTURAL
WORK THAT IS SEASONAL IN NATURE AND THE EMPLOYMENT IS FOR THE
DURATION OF THE PLANTING OR HARVESTING SEASON.

“PROJECT, EXTRA AND SEASONAL EMPLOYEES SHALL HAVE THE RIGHT TO
SECURITY OF TENURE AND ARE ENTITLED TO RESUME THEIR EMPLOYMENT IN
THE SAME OR SIMILAR POSITION UPON THE START OF THE NEXT PROJECT OR
OCCASION FOR EXTRA OR SEASONAL EMPLOYMENT, AS THE CASE MAY BE:
PROVIDED, THAT DURING THE TIME THAT THEIR SERVICES ARE NOT ACTUALLY
AVAILED OF, THEY SHALL BE CONSIDERED TO BE ON AUTHORIZED LEAVE
WITHOUT PAY.”

SEC. 11. A new Article 280-B is hereby inserted in the Labor Code to read as follows:

“ART. 280-B. PROHIBITION AGAINST FIXED TERM EMPLOYMENT. — NO
EMPLOYER SHALL HIRE ANY EMPLOYEE FOR A FIXED PERIOD, EXCEPT: (1)
PROJECT EMPLOYEES; (2) EXTRA EMPLOYEES; (3) SEASONAL EMPLOYEES, (4)
IN INDUSTRIES THAT ARE CERTIFIED BY THE PRESIDENT IN AN EXECUTIVE
ORDER, AS ALLOWABLE, DUE TO EXISTING AND SUBSTANTIAL LOSSES IN THE
INDUSTRY AS A WHOLE BROUGHT ABOUT BY AN INABILITY TO PRICE GOODS
COMPETITIVELY IN THE MARKET DESPITE RESORT TO ALL REASONABLE
MEASURES; PROVIDED, THAT SUCH CERTIFICATION SHALL BE FOR A PERIOD OF
AT MOST THREE (3) YEARS: PROVIDED FURTHER, THAT THE PRESIDENT MAY
RENEW THE CERTIFICATION UPON EXPIRY SHOULD THE CIRCUMSTANCES
SUBSIT FOR A SIMILAR PERIOD AND SUBJECT TO SIMILAR RENEWALS; (5)
OVERSEAS FILIPINO WORKERS; (6) THOSE HIRED TO PLAY PROFESSIONAL
SPORTS; (7) THOSE APPOINTED TO SENSITIVE POSITIONS IN EDUCATIONAL
INSTITUTIONS SUCH AS DEAN, ASSISTANT DEAN, PRINCIPAL AND COLLEGE

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SECRETARY; AND (8) THOSE EMPLOED AS MEMBERS OF MANAGERIAL STAFF,
OTHER THAN THE FOREGOING EXCEPTIONS, ANY STUIPULATION FIXING A
PERIOD OF EMPLOYMENT SHALL BE VOID.”

SEC. 12. Article 280 of the Labor Code is hereby amended to read as follows:

“ART. 281. Probationary Employment. - Probationary employment shall not exceed six
(6) months from the date the employee started working [unless it is covered by an
apprenticeship agreement stipulating a longer period]. The services of an employee who
has been engaged on a probationary basis may be terminated for a just cause or [when he
fails] UPON FAILURE to qualify as a regular employee in accordance with reasonable
standards made known by the employer to the employee at the time of his engagement. An
employee who is allowed to work after a probationary period, EVEN UNDER THE GUISE
OF AN EXTENSION, shall be considered a regular employee.”

THE TERMINATION OF PROBATIONARY EMPLOYEES SHALL NOT BE VALID IF
DONE TO PRECLUDE ACQUISITION OF SECURITY OF TENURE BY THE EMPLOYEE.
THE PRESENCE OF ANY OF THE FOLLOWING CIRCUMSTANCES SHALL CREATE A
REBUTTABLE PRESUMPTION OF THE INTENT TO CIRCUMVENT THE RIGHT TO
SECURITY OF TENURE OF PROBATIONARY EMPLOYEES:

1, TERMINATION OF ALL OR ALMOST ALL OF THE PROBATIONARY EMPLOYEES
AT THE END OF THE PROBATIONARY PERIOD AND THE SUBSEQUENT HIRING
OF EMPLOYEES PERFORMING THE SAME WORK OR TASK AND/OR
OCCUPYING THE SAME POSITION AS THOSE VACATED BY THE PREVIOUS
PROBATIONARY EMPLOYEES.

2. MAINTAINING PROBATIONARY EMPLOYEES IN EXCESS OF THIRTY PERCENT
(30%) OF THE TOTAL WORKFORCE. HOWEVER, NEWLY-CREATED
COMPANIES/EMPLOYERS ARE EXEMPTED FROM OBSERVING THE
FOREGOING PERCENTAGE RESTRICTION WITHIN ONE (1) YEAR FROM THE
START OF THEIR BUSINESS OPERATIONS.

SEC. 13. — Article 288 of the Labor Code is hereby amended to read as follows:

“ART. 288. Penalties. — Except as otherwise provided in this Code, or unless the acts
complained of hinge on a question of interpretation or implementation of ambiguous
provisions of an existing collective bargaining agreement, any violation of the provisions
of this Code declared to be unlawful or penal in nature shall be punished with a fine of
not less than One Thousand Pesos (P1,000.00) nor more than Ten Thousand Pesos
(P10,000.00) or imprisonment of not less than three months nor more than three years,
or both such fine and imprisonment at the discretion of the court.

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“ANY PRINCIPAL OR SUBCONTRACTOR WHO ENGAGES IN LABOR ONLY
CONTRACTING AND/OR VIOLATES ARTICLES 106, 106-A, 106-B, 106-C, 106-
D AND 106-E SHALL BE SOLIDARILY LIABLE TO INDEMNIFY EACH
SUBCONTRACTED EMPLOYEE NOT LESS THAN FIFTY THOUSAND PESOS
(P50,000.00) WITHOUT PREJUDICE TO OTHER MONETARY AWARDS TO
WHICH SUCH SUBCONTRACTED EMPLOYEE MAY BE ENTITLED SUCH AS
BACKWAGES, MONETARY CLAIMS AND BENEFITS UNDER AN APPLICABLE
CERTIFIED BARGAINING AGREEMENT OR COMPANY POLICY, WHETHER
WRITTEN OR OTHERWISE.

“ANY EMPLOYER WHO DELIBERATELY CATEGORIZES OR OTHERWISE TREATS
REGULAR EMPLOYEES TO BE ANY NON-REGULAR EMPLOYEE SHALL BE
LIABLE TO INDEMNIFY EACH MISCLASSIFIED EMPLOYEE NO LESS THAN
FIFTY THOUSAND PESOS (P50,000.00) WITHOUT PREJUDICE TO OTHER
MONETARY AWARDS TO WHICH SUCH EMPLOYEE MAY BE ENTITLED SUCH AS.
BACKWAGES, MONETARY CLAIMS AND BENEFITS UNDER AN APPLICABLE
CERTIFIED BARGAINING AGREEMENT.

“In addition to such penalty, any alien found guilty shall be summarily deported upon
completion of service of sentence.

“Any provision of law to the contrary notwithstanding, any criminal offense punished in
this Code, shall be under the concurrent jurisdiction of the Municipal or City Court’s and
Courts of First Instance.”

SEC. 14. Implementing Rules and Regulations. - The Department of Labor and
Employment (DOLE) shall issue, within sixty (60) days after the effectivity of this Act, the rules
and regulations for its effective implementation.

SEC. 15. Separability Clause. — If for any reason, any section or provision of this Act is held
unscontitutional or invalid, the other sections or provisions hereof shall not be affected thereby
and shall continue to be in full force and effect.

SEC. 16. Repeating Clause. — All |aws, decrees, executive orders, rules and regulations, or
Parts thereof inconsistent with the provisions of this Act are hereby repealed or modified
accordingly.

SEC. 17. 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 publications.

Approved,

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