FIFTEENTH CONGRESS OF THE REPUBLIC 
} 
OF THE PHILIPPINES 
) 
First Regular Session 
} 
SENATE 
S. No. 1015 
Introduced by Senator Manuel "Lito" M. Lapid 
EXPLANATORY NOTE 
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t 
Workers hired by agencies through the job contracting scheme are the most 
underpaid, neglected and oppressed among the country's labor force. 
May of them toil endlessly for years in a company they cannot even call their 
employer. Their hard work is compensated with a chopped wage, already pre-deducted 
by their hiring agencies. Many of them do not get their legally mandated benefits. 
Worse, their hopes of getting retirement pay, after a lifetime of hard work, almost always 
turn into illusions. 
This is a grave scandal that must be stopped. Workers hired through job 
contractors must receive all the benefits due them under the law. 
Against such backdrop, this bill is being filed to amend Article 106 of Presidential 
Decree 442, as amended, otherwise known as the Labor Code of the Philippines. 
The bill 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. . 
In view of the foregoing, early approval of this bill is earnestly sought. 
~ 
MANiIi "LITO"" .L 
Senator 


FIFTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
First Regular Session 
SENATE 
S. No. 1015 
) 
) 
) 
, f" 
Introduced by Senator Manuel "Lito" M. Lapid 
AN ACT 
EXPANDING THE LIABILITIES OF INDIRECT EMPLOYERS IN JOB 
CONTRACTING, 
COVERING 
OTHER 
BENE61TS 
DUE 
THEIR 
EMPLOYEES, FOR THIS PURPOSE AMENDING ARTICLE 106 OF 
PRESIDENTIAL DECREE 442, AS AMENDED, OTHERWISE KNOWN AS 
THE LABOR CODE OF THE PHILIPPINES AND FOR OTHER PURPOSES 
Be it enacted by the Senate and 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 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 laUer'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. 


FURTHERMORE, IN THE EVENT THAT THE EMPLOYEES OF 
THE CONTRACTOR OR SUBCONTRACTOR HAVE RENDERED AT 
LEAST ONE (1) YEAR OF SERVICE TO THE SAME EMPLOYER, 
WHETHER OR NOT 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 appropriation regulations, restrict of 
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. 
Separability Crause. -
If any provision of this Act is held 
unconstitutional, other provisions not affected thereby shall remain valid and binding. 
SEC. 3. 
Repealing Clause. - All laws, presidential decrees, rules and 
regulations insofar as they are inconsistent with this Act, are hereby repealed, amended 
or modified accordingly. 
SEC. 4. 
Effectivity Clause. - This Act shall take effect fifteen (15) days 
following its publication in the Official Gazette or two (2) newspapers of general 
circulation. 
Approved,