SIxn~ENTH CONGRESS OF THE 
) 
'13 
jilL i 7, rJ :24 
REPUBLIC OF THE PHILIPPINES 
) 
First Regular Session 
) 
1; ; 
"Y:--f--
SENATE 
SENATE; BILL NO. 
INTRODUCED BY SENATOR JOSEPH VICTOR G. EJERCITO 
-----------_._--
EXPLANATORY NOTE 
Arguably, the gravest threat to our workers' right to security of 
tenure comes from the current trend towards contractualization and de-
regularization. 
Workers 
settle 
for 
intermittent 
and 
short--term 
employment affecting not only their ability to earn livelihood but also 
their productivity and quality of work. 
The present proposal recognizes subcontracting as a valid business 
practice but also protects workers from unscrupulous and unnecessary 
subcontracting. Hence, it balances legitimate business interest with the 
need to protect workers from insecure employment conditions. 
In particular, the present proposal is characterized by the 
following: 
1. Many of the concepts and processes contained in the proposal 
reflect current practice as provided by Department Order No. 18 series of 
2002 (DO 18). While some refinements have been made to DO 18 
provisions, core concepts have been retained such as: 
• 
Definition of the Contractor and Subcontractor 
• 
Recognition of rights of subcontracted workers 
• 
Maintenance of registration system for legitimate subcontractors 
2. The salient innovations introduced by this proposal include the 
following: 
• 
Principals can engage a maximum of 10% subcontracted 
employees. 
• 
Violation of contracting rules is made an unfair labor practice. 
• 
Violation of contracting rules is penalized by a fine. 
Hence, the passage of this bill is earnestly sought. 
--<J-'~)~ 
JOSEPH VICTOR G. EJERCI'l'O 


,,~f'nbtr 
{!fiHI;/' nf rl,;' ~.d'td,\~ry, 
SIXTEENTH CONGl'CESS OF TH]<~ 
) 
'13 
JlJLTI 
;\ 9 :25 
REPUBLIC OF THE PHILIPPINES 
) 
First Regular Session 
) 
SENATE 
SENATE BILL NO.· 
845 
INTRODUCED BY SENATOR JOSEPH VICTOR G. EJERCITO 
AN ACT 
STRENGTHENING THE SECURITY OJl' TENURE 
OF WORKERS 
IN 
THE PRIVATE SECTOR, 
AMENDING FOR THE PURPOSE ARTICLES 24·8, 
279, 280, 281 AND 288, AND INTRODUCING 
NEW ARTICLES 106, lO6-A, 106-B, l06-C, 106-
D, 106-E, 280-A AND 280-B TO PRESIDENTIAl, 
DECREE NO. 442, AS AMENDED, mrHERWISE 
KNOWN 
AS 
THE 
LABOR 
CODE 
OF 
THE 
PHILIPPINES 
Be it enacted by the Senate and 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Article 106 of the Labor Code is hereby repealed and 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 m' SubcontractOl'. - 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. 


"TheS 
j 
fLb 
dEl 
b 
ecre 'ary 
0 
a, or an 
mp oyment 
may, 
y 
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 makc 
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, 
to prevent any violation or circumvention of any provision of 
this Code. 
"There is 'labor-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 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.] 
"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, THE 
SUBCONTRACTOR 
WHICH 
HAS 
THE 
CAPACITY 
TO 
INDEPENDENTLY UNDERTAKE AND ACTUALI,Y UNDER'fAKES 
'l'HE PERFORMANCE OF THE JOB, WORK OR SERVICE;, AND 
THE 
CONTRACTUAL 
WORKERS 
ENGAGED 
BY 
'l'HE 


SUBCONTRACTOR TO ACCOMPLISH THE JOB WORK OR 
SERVICE. 
"FOR 
PURPOSES 
OF 
THIS 
CODE, 
"SUBCON1'RACTING" 
REFERS TO AN ARRANGEMENT WHEREBY: 
(A)A PRINCIPAL AGREES TO PUT OUT OR FARM OUT 
WITH A SUBCONTRACTOR THE PJ~RFORMANCE OR 
COMI'LETION 
Olr A 
SPECIFIC JOB, 
WORK OR 
SERVICE WITHIN A DEFINITE OR PREDETERMJ[NED 
PERIOD, REGARDLESS OF WHETHER SUCH JOB, 
WORK OR SERVICE IS TO BE PERFORMED OR 
COMPLETED WITHIN OR OUTSIDE THE PREMISES OF 
'I'HE PRINCIPAL; OR 
(S)A 
PERSON, 
PARTNERSHIP, 
ASSOCIATION 
OR 
CORPORATION WHICH, NOT BEING A PRINCIPAL, 
CONTRACTS WITH A SUBCONTRACTOR FOR 'I'HE 
PERFORMANCE OF ANY WORK, TASK, JOB OR 
PROJECT." 
SEC. 2. A new Article 106-A is hereby inserted in the Labor Code to read 
as follows: 
"ART. 106 - A. RIGHTS AND LIABILITlES OF PARTIES. - (A.) 
TIlE 
SUBCONTR.{lCTED 
EMPLOYEE. 
IN 
ALL 
CASES, 
SUBCONTRACTIm EMPLOYEES SHALL BE ENTITLED TO ALL 
THE RIGHTS AND PRIVILEGES DUE REGULAR EMPLOYEES 
INCLUDING THE FOLLOWING: 
1. 
SAFE AND HEALTHFUL WORKING CONDITIONS; 
LABOR 
STANDARDS 
SUCH 
AS 
SERVICE 
INCENTIVE 
LEAVES, 
REST 
DAYS, 
OVER'J:'lME 
PAY, 
HOLIDAY PAY, 13TH 
I~ONTH PAY AND 
SEPARATION 
RETIREMENT 
PAY; 
BENEFITS; 
SOCIAL 
SECURITY . AND 
WEL,FARE 
BENEFITS; 
SELF-ORGANIZATION, 
COLLECT'IVE 
BARGAINING 


AND PEACEFUL 
AND 
SECURITY OF TENURE. 
CONCERTED ACTIVITIES; 
"IN ADDITION, SUBCONTRACTED EllVIPLOYEES SHALl, 
HAVE THE RIGHT 1'01 A WRITTEN CONTRACT WHICH SHALL 
INCLUDE THE FOLLOWING TERMS AND CONDITIONS: 
I. 
THE SPECIFIC DESCRIPTION O:I!' THE JOB, WORK 
OR 
SERVIC!t~ 
TO 
BE 
PERFORMED 
BY 
THE 
CONTRACTUAL 
EMPLQYEE; 
THE PLACE OF WORK AND TERMS AND CONDITIONS 
OF EMPLOYMENT, INCLUDING A STATEMENT OF 
THE WAGE RA'l'E APPLICABLE TO THE INDIVmUAJ, 
CONTRACTUAL EMPLOYEE; 
THE TERM OR 
DURATION OF EMPLOYMENT, WHICH SHALL BE 
COEXTENSIVE WITH 
THE 
CON'TRACT 
OF THE 
PRINCIPAL AND SUBCONTRACTOR, OR WITH THE 
SPECIFIC PHASE FOR WHICH THE CONTRACTUAl, 
EMPLOYEE IS ENGAGED, AS THE CASE MAY BE. 
"THE 
SUBCQNTRACTED 
EMPLOYEE 
SHALL 
BE 
INFORMED BY THE SUBCONTRACTOR OF THE FOREGOING 
TERMS AND CONDITIONS ON OR BEFORE 1'HE FIRST DAY QF 
HIS EMPLOYMENT. 
"(B.) 
THE PRINCIPAL AND THE SUBCONTRACTOR. 
THE 
LEGITIMATE SUBCONTRACTOR SHAI.L BE CONSIDERED THE 
EMPLOYER 
OF 
THE 
CONTRACTUAL 
EMPJ,OYEE 
FOR 
PURPOSES OF ENFORCING THE PROVISIONS OF THE LABOR 
CODE AND OTHER SOCIAL LEGISLATION. IN AI,L CASES OF 
SUBCONTRACTING, HOWEVER, THE PRINCIPAL SHALl, BE 
SOI,IDARILY LIABLE WITH THE CONTRACTOR IN THE EVENT 
OF ANY VIOLATION OF ANY PROVISION OF THE J,ABOR 
CODE, INCLUDING THE FAILURE TO PAY WAGES. 


"THE PRINCIPAl. SHALL BE DEEMED THE EMPLOYER OF 
THE CONTRACTUAL EMPLOYEE IN ANY OF' THE FOLl,OWING 
CASES: 
I. 
WHERE THERE IS LABOR-ONLY CONTRACTING; OR 
II. 
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 SOLIDARII.Y LlABLE 
WITH THE SUBCONTRACTOR IN CASE THE CONTRACT 
BETWEEN 
THE 
PRINCIPAL 
AND 
SUBCONTRACTOR 
IS 
PRETERMINATED FOR REASONS NOT ATTRIBUTABLE TO THE 
FAULT OF THE SUBCONTRACTOR," 
SEC. 3. A new Article l06-B is hereby inserted in the Labor Code to 
read as follows: 
"ART. 
106-8. 
PROHIBITION 
AGAINST 
LABOR-ONLY 
SUBCONTRACTING. 
ENGAGING 
IN 
LABOR-ONLY 
CONTRACTING OR CONTRACTING WITH A LABOR-ONLY 
CONTRACTOR IS STRICTLY 
PROHIBITI:l:D. 
FOR 'rRIS 
PURPOSE, LABOR-ONLY CONTRACTING REFERS TO AN 
ARRANGEMENT WHERE THE SUBCONTJRACTOR MERELY 
RECRUITS, SUPI'LIES 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 SUBSTANTIAJ~ 
CAPITAL AND INVESTMENT WHICH RELATES TO THE 
JOB, WORK OR SERVICE TO BE PERFORMED; 
(8) THE EMPLOYEES RECRUITED, SUPPLUm OR PLAmm BY 
SUCH SUBCONTRACTOR ARE PERFORMING ACTIVITIES 
WHICH ARE USUAI,LY NECESSARY OR DESIRABU:j; OR 
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 '1'0 BE 
USED IN REACHING THAT END. 
"AS USED IN THIS CODE, 'SUBSTANTIAL CAPITAL AND 
INVESTMENT' 
IN 
SUBCONTRACTING 
ARRANGEMENTS 
REFERS 
TO 
TOOLS, 
EQUIPMENT, 
IMPLEMENTS, 
MACHINERIES 
AND 
WORK 
PREMISES, 
ACTUALI,Y 
AND 
DIRECTLY USED BY THE 
SUBCONT:RACTOR IN 'I'HE 
PERFORMANCE OR COMPLETION OF THI!: JOB, WORK OR 
SERVICE 
CONTRACTED 
OUT. 
THE 
USE 
OF 
THE 
SUBCONTRACTOR 
OF 
THE 
EQUIPMENT, 
FACILlTIES, 
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 BY 
ITS1~LF CONST]1'UTE 
SUBSTANTIAl, CAPITAL AND INVESTMENT. 
"AS USED IN 'I'HIS CODE, THE 'RIGHT TO CONTROJ,' IN 
SUBCONTRACTING ARRANGEMENTS SHAL,L REFER TO THE 
RIGHT RESERVED TO THE PERSON 
1l1'OR WHOM THE 
SERVICES 
OF 
THE 
CONTRACTUAL 
WORKERS 
ARE 
PERIPORMED, TO DETERMINE NOT ONLY THE END 'Jl'0 BE 
ACHIEVED, BUT ALSO THE MANNER AND MEANS '1'0 BE 
USED IN REACHING THAT END." 
SEC. 4. A new Article l06-C is hereby inserted in the Labor Code to 
read as follows: 
"ART. 
1.06-C. 
PROHIBITIONS 
IN 
SUBCONTRACTING 
ARRANGEMENTS. --
REGARDLESS OF COMPLIANCE WITH 
THE IMMEDIATELY PRECEDING ARTICLE" THE FOLLOWING 


ACTS ARE HEREBY DECLARED PROHIBITED FOR BElNG 
CONTRARY TO LAW OR PUBLlC POLICY: 
(A) ENGAGING OR MAINTAINING BY THE PRINCIPAl, OF 
SUBCONTRACTED 
EMPLOYEES IN EXCESS OF 20% OF 
THE PRINCIPAL'S TOTAL WORKFORCE. 
PROVIDED 
THAT SUCH SUBCONTRACTED EMPlf..OYEES DO NOT 
PERFORM WORK THAT IS NECESSARY OR DESIRABLE 
OR DIRECTLY RELATED TO THE USUAL BUSINJ~S~~ OR 
TRADE OR BPSINESS OF THE EMPLOY1H:R; 
(8) CONTRACTING OUT OF A JOB, WORK OR SERVICE WHEN 
THE SAME RESULTS IN THE TERMINATION OF REGUJ,AR 
EMPLOYEES AND REDUCTION OF WORK HOURS OR 
REDUCTION OR SPLITTING OF THE BARGAINING UNIT; 
(C) 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 
Oll 
COOPERATIVE, 
SUPPLIES WORKERS TO AN EMPLOYER, WITH OR 
Wl'fHOUT ANY MONETARY OR OTHEll CONSIDERATION, 
WHETHER IN THE CAPACITY OF AN AGENT OF THE 
EMPLOYER OR AS 
AN 
OSTENSIBI,E INDEPENDENT 
CONTRACTOR; 
(D) TAKING 
UNDUE 
ADVANTAGE 
OF 
THE 
ECONOMIC 
SITUATION OR LACK OF BARGAINING STRENGTH OF 
THE CONTRACTUAL EMPLOYEE, OR UNDERMINING fIlS 
SECURITY 
OF 
TENURE 
OR 
BASIC 
RIGH'l'S, 
OR 
CIRCUMVENTING 
THE 
PROVISIONS 
OF 
REGULAR 
EMPLOYMENT, IN ANY OF THE FOLLOWING INSTANCES: 
I. 
IN 
ADDITION 
TO 
fIlS 
ASSIGJ~ED FUNCTIONS, 
REQUIRING 
THE 
CONTRACTUAL 
EMPLOYEE 
TO 
PERFORM 
FUNCTIONS 
WHICH 
ARE 
CURRENTI,Y 
BEING PERFORMED BY THE REGl[JLAR EMPLOYEES 
OF THE PRINCIPAL OR OF THE SUBCONTRACTOR; 


II. 
REQUIRING HIM TO SIGN, AS A PRECONDI1'ION TO 
EMPLOYMEN1' OR CONTINUED EMPLOYMENT, AN 
ANTEDATED 
RESIGNATION 
LETTER; 
A 
BLANK 
PAYROLL; 
A 
WAIVER 
OF 
LAlli OR 
STANDARDS 
INCLUDXNG 
MINIMUM 
WAGES 
AND 
SOCIAl, 
OR 
WELFARE BENEFITS; OR A QUITCLAIM RELEASING 
THE PRINCIPAL, 
SUBCONTRACTOR FROM ANY 
LIABILITY AS TO PAYMENT OF FUTURE CLAIMS; AND 
III. 
REQUIRING HIM TO SIGN A CON'l'RACT FIXING THE 
PERIOD OF EMPLOYMENT TO A TERM SHORTER 
THAN THE TERM OF THE CONTRACT BETWEEN THE 
PRINCIPAl, AND THE 
SUBCONTRACTOR, UNJ.ESS 
THE LATTER CONTRACT IS DIVISUJLE INTO PHASES 
FOR WHICH SUBSTANTIALIJY 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 AN IN-HOUSE AGENCY WHICH REFERS TO A: 
I. SUBCONTRACTOR ENGAGED 
IN THE SUPPLY OF 
LABOR WHICH IS OWNED, MANAGED OR CONTROlJLED 
BY THE PRINCIPAL; OR 
II. SUBCONTRACTOR IN WHICH THE PRINCIPAl, OWNS OR 
OTHERWISE REPRESENTS ANY SHARE OF STOCK; OR 
III. SUBCONTRACTOR WHICH OPERATES SOLEI,Y FOR 
THE PRINCIPAL. 
(F) CONTRACTING OUT OF A .JOB, WORK OR SERVICE THAT 
IS NECESSARY OR DESIRABLE OR DIRECTLY REJ,ATED 
TO THE BUSINESS OR OPERATION OF THE PRINCIPAL; 
(G) CONTRACTING OUT OF A JOB, WORK OR SERVICE DEING 
PERFORMED 
BY 
OR 
PREVIOUSLY 
PERFORMED 
BY 
REGULAR 
EMPLOYEES 
AND/OR 
MEMBERS 
OF THE 
BARGAINING UNIT." 


SEC. 5. A new Article 106-D is hereby inserted in the Labor Code to read 
as follows: 
"ART. 106 - D. REGISTRATION OF SUBCONTRACTORS. -" fA.) 
MANDATORY REGISTRATIo.N. IT SHAI,L BE MANDATORY F'o.R 
ALL PERSo.NS o.R ENTlTIES ACTING AS SUBCONTRACTo.RS 
TO. REGISTER UNDER A REGISTRATION SYSTEM HEREBY 
ESTABLISHED TO. Go.VERN Co.NTRACTING, ARRANGEMENTS 
AND TO. BE IMPLEMENTED BY THE REGIONAL o.Fl<'ICE:S o.F 
THE DEPARTMENT o.F LABo.R AND EMPLo.YMENT. 
"No.N-REGISTERED 
PERSo.NS 
OR ENTITIES 
ACTING 
AS 
SUBCo.NTRACTORS SHALL BE DEEMED AS LABOR-ONLY 
Co.NTRACTo.RS. 
MERE 
REGISTRATION, 
WITHo.UT 
A 
SHo.WING OF Co.MPLIANCE WITH ALI. REQUIREMENTS Fo.R 
LEGITIMATE SUBCo.NTRACTXNG AND AVOIDANCE OF ALl, 
PRo.HIBITIONS o.F SUBCo.NTRACTING, SHALL NOT INDlCATE 
LEGITIMATE SUBCo.NTRACTING. 
"(B.) 
REQUIREMENTS 
FOR 
REGISTRATION. 
A 
SUBCo.NTRACTOR MAY BE LISTED IN THE REGISTRY OF 
SUBCONTRACTo.RS UPON Co.MPLETIo.N AND SUBMISSION o.F 
AN APPLICATION FORM PROVIDED BY THE DEPARTMENT. 
IN 
THE 
APPLICATIo.N 
Fo.RM, 
THE 
APPLICANT 
SUBCo.NTRACTo.R 
SHAI.L 
PROVIDE 
THE 
Fo.LLo.WING 
INFo.RMATION: 
I. 
THE NAME AND BUSINESS ADDRESS o.F THE 
APPLICANT AND THE 
AREA o.R AREAS WHERE IT 
SEEKS TO. o.PERATE; 
II. THE NAMES AND ADDRESSES o.F o.FFICERS, IF THE 
APPLICANT IS A Co.RPo.RATION, PARTNERSHIP, 
COOPERATIVE OR UNIo.N; 
III. THE NATURE o.F THE APPLICANT'S BUSINESS AND 
THE INDUSTRY o.R INDUSTRIES WHERE THE 
APPLICANT SEEKS TO. OPERATE; 


IV. THE NUMBER OF REGULAR WOJRKERS; THE LIST 
OF CLIENTS, IF ANY; THE NUMBE:R OF PERSONNEL 
ASSIGNED TO EACH CLIENT, IF ANY AND THE 
SERVICES PROVIDED TO THE CLlENT; 
V. THE DESCRlPTION mr THE PHASES OF THE 
CONTHACT AND THE NUMBER OF EMPLOYEES 
COVI;;RED IN EACH PHASE, WHERE APPROPRIATE; 
AND 
VI. A COPY OF AUDITED FINANCIAl, STATEMENTS IF 
THE 
APPLICANT 
IS 
A 
CORPORATION, 
PARTNERSHIP, COOPERATIVE OR A UNION, OR 
COPY OF THE LATEST INCOME TAX RETURN IF 
THE APPLICANT IS A SOLE PROPFtIETORSHIP. 
"THE 
APPLICATION 
SHALL 
BE 
SUPPORTED 
BY 
THE 
FOLLOWING: 
I. 
A CERTIFIED COPY OF A CERTIFICATE OF 
RECHSTRATION OF FIRM OR BUSINESS NAME FROM 
THE SECURITIES AND EXCHANGE COMMISSION 
(SEC), DEPARTMENT OF TRADll: 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 
OPERATES. 
SUBCONTRACTOR 
"THE APPLICATION SHALL BE VERIFIED AND SHALL INCUJDE 
AN UNDERTAKING THAT THE SUBCOllfTRACTOR SHALL 
ABIDE 
BY 
ALl, 
APPLICABLE 
LABOR 
LAWS 
AND 
REGULATIONS. 
"(C.) 
FILING AND PROCESSING OF APPLICATIONS. THE 
APPLICATION AND ITS SUPPORTING DOCUMENTS SHALL BE 


FILED IN TRIPLICATE IN THE REGIONAL OFFICES WHERE 
THE APPLICANT PRINCIPALLY OPERATES. NO APPUCA'l'ION 
FOR REGISTRATION SlIAI,L BE ACCEPTED UNLESS ALJ~ THE 
FOREGOING REQUIREMENTS ARE COMPUED WITH. THE 
SUBCONTRACTOR SHALL BE DEEMED Rll!:GISTERED UPON 
PAYMENT OI<' A REGISTRATION FEE TO BE: DETERMINE» BY 
THE REGIONAL OFFICE. 
"WHERE AU. TH]!: SUPPORTING DOCUME:NTS HAVE BEEN 
SUBMITTED, 
',fHE 
REGIONAL 
OFFICE 
MAY 
DENY 
OR 
APPROVE THE APPLICATION WITHIN SEVEN (7) WORHJNO 
DAYS AFTER ITS FILING. 
"UPON 
REGISTRATION, 
THE 
REGIONAL 
OFFICE SHALL 
RETURN ONI<".: SET Ol~ THE DULY-STAMJ~ED APPLICA'l'ION 
DOCUMENTS TO THE APPLICANT, RETAIN ONE SET FOR ITS 
FILE, AND TRANSMIT THE REMAINING SET TO THE fjUREAU 
OF I,OCAI, EMPLOYMENT. THE BUREAU Sla:ALL DEVISB THE 
NECESSARY FORMS FOR THE EXPEDITIOUS PROCESSING OF 
AI.L APPLICATIONS FOR REGISTRATION. 
"(D.) 
ANNUAl, 
CONTRACTORS. 
REPORTING 
OF 
REGISTERED 
THE SUBCONTRACTOR 8HALL SUBMrf IN 
TRIPLICATE COPIES AN ANNUAL REPORT USING A 
PRESCRIBED FORM TO THE APPROPRIA.TE REGIONAL 
OFFXCE NOT LATER 1'HAN THE 15TH OF ,JA.NUARY OF THE 
FOLLOWING YEAR. THE REPORT SHALL INCLUDE THE 
FOLLOWING DOCUMENTS: 
I. 
A LIST OF CONTRACTS ENTERED WI'l'H THE 
PRINCIPAL 
DURING 
THE 
SUBJECT 
REPORTING 
PERIOD; 
II. 
THE NUMBER OF WORKERS COVERED BY JJ:ACH 
CONTRACT WITH THE PRINCIPAL; 
m. A 
SWORN STATEMENT SIGN]:!)D 
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 HOIIVIE 
DEVELOPMENT MUTUAL FUND (HDM.F), 
PHILHEALTH, EMPLOYEES COMPENSATION 
COMMISSION IECC), AND BUREAU OF INTE.RN.AL 
REVENUE (BIR) FOR ALI, CONTRACTUAL 
EMPLOYEES PERTAINING TO THE REPORTING 
PERIOD. 
"THE REGIONAl, OFFICE SHALL RETURN ONE SET OF' THE 
DULY-STAMPED REPORT TO THE 
SUBCONTRAC'fOR, 
RETAIN ONE SET FOR ITS FILE, AND TRANSMIT THE 
REMAINING SET TO THE BUREAU OF LOCAL EMPJ,OYMENT 
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: 
I. 
NON-SUBMISSION OF CONTRACTS BETWEEN THE 
PRINCIPAL AND THE 
SUBCONTRACTOR WHEN 
REQUIRED '1'0 DO SO; 
II. 
NON-SUBMISSION OF SWORN DOCUMENTS STATED 
IN ARTICLE 106-D 4 (C); 
III. ENGAGEMENT IN LABOR-ONLY CONTRACTING; 
IV. VIOLATION 
OF 
THE 
PROHIBITED 
ACTIVITIES 
PROVIDED BY THIS CODE; 
V. 
NON-COMPLIANCE WITH LABOR STANDARDS AND 
WORK.ING CONDITIONS. 
"(F.) RENEWAL OF REGISTRATION OF SUBCONTRACTORS. ALL 
REGISTERED SUBCONTRACTORS MAY API'LY FOR RENJJ:WAL 
OF REGISTRATION EVERY TWO YEARS. FOR THIS PURI'OSE, 


THE 'rRIPARTI'l'E INDUSTRIAL PEACE COUNCIL (TIPC) AS 
CREATED UNDER EXECUTIVE ORDER NO. 49, SHAI,L SERVE 
AS THE OVERSIGHT COMMITTEE TO VERIFY AND MONITOR 
THE FOLI.OWlNG: 
I. 
ENGAGING 
IN 
ALLOWABL1B: 
CONTRACTING 
ACTIVITIES; AND 
II. 
COMPLIANCE WITH ADMINISTRATIVE REPORTING 
REQUIREMENTS. " 
SEC. G. 
A new Article l06-E is hereby inserted in the Labor Code to 
read as follows: 
"ART. lOG-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 E:Y THE REGIONAL 
DIRECTOR OR HIS AUTHORIZED REPRESENTATIVE. 
"A 
COPY 
OF 
THE 
CON1'RACT 
BETWEEN 
THE 
SUBCONTRACTED EMPLOYEE AND THE SUBCONTRACTOR 
SHALL BE FURNISHED THE CERTIFIED BARGAINING AGENT, 
IF THERE IS ANY." 
SEC. 7. 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 
practice: 
(a) To interfere with, restrain or coerce employees in the 
exercise 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; 
(c) To ENGAGE A LABOR-ONLY CONTRACTOR 
OR 
TO 
contract out services or functions 
being 
performed 
by 
[union] 
MEMBERS 
OF, OR 
POSITIONS COVERED BY, 
THE BARGAINING UNIT AND/OR REGULAR 
RANK··AND-
FILE 
AND SUPERVISORY 
EMPLOYE1&S 
[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; 
(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 for 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 collcctive 
bargaining 
agreement: 
Provided, 
that 
the 
individual 
authorization required under Article 242, paragraph (0) or this 
Code shall not apply to the non-members of the recognized 
collective bargaining agent; 


Code; 
(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 a:s prescribed by this 
(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; [orJ 
(i) 
To violate a collective bargaining agreement [.J; OR 
(J) 
TO DENY THE EXISTENCE OF EMPlI..OYER-EMPLOYEE 
RELATIONSHlP 
AND/OR 
TO 
CLASSI1PY 
AS 
CASUAL, 
CONTRACTUAL, SUBCONTRACTED EMPLOYEES, AGENCY 
EMPLOYEES, OR OTHER NON-REGULA:[~: CLASSIF'ICATION 
THOSE EMPLOYEES WHO ARE REGULAR EMPLOYEES BY 
VIRTUE OF ARTICLE 280 OF THIS CODE. 
" 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." 
SEC. 8. Article 279 of the Labor Code is hereby amended to read 
as follows: 
"ART. 279. Security of "enure. -
[In cases of regular 
employment, the employer shall not terminate the services of an 
employee] ALl, EMPLOYEES SHALL ENJOY SECURITY OF 
TENURE AND SHALL NO'r BE TERMINATED except for a just 
cause or when authorized by this Title. ALSO, THE RIGHT TO 
NOTICE 
IN 
EMPLOYMENT 
REI.ATIONS 
REQUIRES 
ANY 
EMPLOYER WHO SEEKS TO DISMISS 
A WORKER TO 
FURNISH 
HIM 
A 
WRITTEN 
NOTICE 
STATING 
THE 
PARTICULAR ACTS OR OMISSION 
CONSTITUTING THE 
GROUNDS FOR HIS DISMISSAL. IN CASES OF ABANDONMENT 


OF WORK, THE WRITTEN NOTICE SHALL B][1; SERVED AT THE 
WORKERS' 
LAST 
KNOWN 
ADDRESS. 
ENTITLES 
THE 
WORKER AN OPPORTUNITY TO ANSWER THE ALLEGATIONS 
STATED AGAINST HIM IN THE NOTICli: OF DlSMISSAJ, 
WITHIN A PERIOD OF 5 CALENDAR DAYS F'ROM RECEIPT OF 
SUCH 
NOTICE 
AND 
WITH 
THE 
ASSISTANCE 
Oli' 
A 
REPRESENTATIVE IF HE SO DESIRES. THE RIGHT '1'0 
NOTICE REQUIRES THE EMPLOYER '1'0 AFFORD THE 
WORKER AMPLE OPPOR'1'UNI1'Y 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 UNm:R THIS ARTICLE, 
INCLUDING THJ!1 RIGHT TO NOTICE AS ELABORATED IN THE 
PRECEDING PARAGRAPH, shall be entitled to IMMEDlATE 
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 compensation was withheld from him up to the 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 oral 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 REJ,ATED TO the usual business or trade or 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 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]. 


"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 OJ<' 'fHE 
EMPLOYER: 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 shall 
continue [while such activity exists] UNLESS H:li! IS TERMINATED 
FOR A JUST CAUSE OR WHEN AUTHORIZED BY THIS TITLE." 
SEC. 10. Project and Extra Employment. A new Article 280-A is 
hereby inserted in the Labor Code to read as follows: 
"ART. 
280-A. 
PROJll:CT, 
EXTRA 
AND 
SEASONAL 
EMPLOYMENT. -
PROJECT EMPLOYMENT REFERS TO THAT 
WHICH HAS BEEN FIXED FOR A SPECI][i'IC PRO.JECT OR 
UNDERTAKING THE COMPLETION OR 1rERMINATION OF 
WHICH HAS BEEN DETERMINED AND MADE KNOWN TO THE 
EMPLOYEE AT THE TIME OF HIS ENGAGEl.Vl[ENT. 
"EXTRA EMPLOYMENT REFERS TO ADDITIONAL WORK 'ro BE 
PERFORMED 
IN 
RESTAURANT 
AND 
HOTEL 
ESTABLISHMENTS 
SPECIFICALLY 
][i'OR 
BANQUET 
FUNCTIONS, SEMINARS AND SIMILAR FUNCTIONS WHERE 
THE REGULAR EMPLOYEES CANNOT 
Rl~ASONABLY COPE 
WITH THE INCREASED DEMANDS OF SUCH EVENTS. 
"SEASONAl. EMPLOYMENT REFERS TO THE PERFORMANCE 
OF AGRICULTURAL WORK IJTHAT IS SEASONAL IN NA'I'UR.E 
AND THE EMPLOYMENT IS FOR THE DURATION OF THE 
PLANTING OR HARVESTING SEASON. 
"PROJECT, EXTRA AND SEASONAL EMPLOYEES SHAIJL HAVE 
THE RIGHT TO SECURITY OF TENURE AIm ARE ENTI'i'LED 
TO RESUME THEIR EMPLOYMENT IN THE SAME OR. SIMILAR 
POSITION UPON THE STAR'!, OF THE NJ!:XT PROJECT OR 


OCCASION FOR EXTRA OR SEASONAL I~MPLOYMENT, AS 
THE CASE MAY BE; 
.PROVIDED, THAT, DURING THE TIME 
THAT 'I'HEIR SERVICES ARE NOT ACTUALLY AVAILED OF, 
THEY SHALL BE CONSIDERED TO BE ON AU'l'HORIZED 
LEAVE WITHOUT PAY." 
SEC. 11.. A new Article 280-8 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: 
(I) 
PROJECT EMPLOYEES; (2) EXTRA EMPLOYEES; 
(3) 
SEASONAL EMPLOYEES; (4) IN INDUSTRIES THA1' ARE 
CERTIFIED BY THE PRESIDENT, 11\[ AN EXECUTIVE 
ORDER, AS ALLOWABLE, 
DUE TO EXISTING AND 
SUBSTANTIAL LOSSl<::S IN THE INDUSTRY AS A WHOLE, 
BROUGHT ABOUT BY AN INABILITY 'TO PRICE GOODS 
COMPETITIVELY IN THE MARKET DESPITE RESOHT 'fO 
ALL REASONABJ,E 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 SUBSIST, FOR 
A 
SIMILAR 
PERIOD 
AND 
SUBJECT 
TO 
SIMILAR 
RENEWALS; (5) OVERSEAS FILIPINO WORKERS; (6) 
THOSE HIRED TO PI,AY PROFESSIONAL SPORTS; (7) 
THOSE 
APPOINTED 
TO 
SENSITIVJlt 
POSITIONS 
IN 
EDUCATIONAL 
INSTITUTIONS 
SUCH 
AS 
DEAN, 
ASSISTANT 
DEAN, 
PRINCIPAL 
AND 
COU,EGE 
SECRETARY; AND (8) THOSE EMPLOYED AS MEMJJERS 
OF THE MANAGERIAL STAFF. 
OTHER THAN THE 
FOREGOING EXCl~PTIONS ANY STIPULATION FIXING A 
PERIOD OF EMPLOYMENT SHALL BE VOID." 


SEC. l2. Article 281 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 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 CIRCUlVlSTANCES SHALL 
CREATE A REBUTTABLE PRESUMPTION OF THE INTEN'I' TO 
CIRCUMVENT THE RIGHT TO SECURITY OF TENURE OF 
PROBATIONARY EMPLOYEES: 
1. 
TERMINA'l'ION 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 'l'ASK 
AND/OR OCCUPYING THE SAME POS]TION AS THOSE 
VACATED BY THJ~ PREVIOUS PROBATIONARY EMPLOYEES. 
2. MAINTAINING PROBATIONARY EMPLOYE:E:S IN EXCESS OF 
30% OF THE TOTAl, WORKFORCE. 
HOWEVER, NEWJ,V-
CREATED COMPANIES/EMPLOYERS ARE EXEMPTED FROM 
OBSERVING THE FOREGOING PERCENTAGE RESTRICTION 
WITHIN ONE (l) YEAR FROM THE START OF 'rHEIR 
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 he punished with a fine of not less than One Thousand 
Pesos 
(P1,000.00) 
nor 
more 
than 
Ten 
Thousand 
Pesos 
(PIO,OOO.OO) 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. 
"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 
SOLIDARH,Y LIABLE TO INDEMNIFY EACH SUBCONTRACTED 
EMPLOYEE NO LESS THAN P50,OOO.00 WITHOUT PREJUDICE 
TO 
OTHER 
MONETARY 
AWARDS 
TO 
WHICH 
SUCH 
SUBCONTRACTED EMPLOYEE MAY BE ENTITLED SUCH AS 
BACKWAGES, MONETARY CLAIMS AND BENEFITS UNDJi::R AN 
APPLICABLE 
CERTIFIED 
BARGAINING 
AGREEMENT 
OR 
COMPANY POLICY, WHETHER WRITTEN OR OTHERWISE. 
"ANY EMPLOYER WHO DELIBERATELY CATEGORIZES OR 
OTHERWISE TREATS REGULAR EMPLOYEES 1'0 BE ANY 
NON-REGULAR EMPLOYEE SHALL BE LIABLE TO INDEMNIFY 
EACH MISCLASSIFIED EMPLOYEE NO LESS THAN P50,OOO.OO 
WITHOUT PREJUDICE TO OTHER MONETARY AWARDS TO 
WHICH SUCH EMPLOYEE MAY BE ENTITLED SUCH AS 
BACKWAGES, MONETARY CLAIMS AND BENEFITS UNDER AN 
APPLlCABI.E CERTIFIED BARGAINING AGREEMENT. 
" In addition to such penalty, any alien found guilty shaH 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 Courts and the 
Courts of First Instance." 
SEC. 14. 
Implementing Rules and Regllliations. -
The 
Department of Labor and Employment (DOLE) shall issue, within 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 unconstitutional 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. Repealing Clause. - AU laws, 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 after 
fifteen (15) days from its publication in the Official Gazette or in at least 
two (2) national newspapers of general circulation. 
Approved,