Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
First Regular Session

4396

House Bill No.

Introduced by Representatives EMMI A. DE JESUS and LUZVIMINDA C. ILAGAN

EXPLANATORY NOTE

Contractual employment has long been a bane for the Filipino workers and people, While it
surely allows Capitalists to rake in bigger profts,ithas not brought about anything beneficial
See kere, Contractuals receive wages that are lower than those received by regulars and
oe genied various benefits. They can be removed from work any time and therefore find @
peed time forming unions and asserting their rights. Women contractuals are denied
Taternity benefits, especially in the havens of contractualization in the country = the export
processing zones, mails and other segments of the service sector of the economy

Contractualization has also been used to weaken the already few existing unions in the
Country. Workers who retire or are laid off from work are replaced with contractual until the
Eater Constitutes a significant section of the workforce. In other cases, contractual workers
aie hired in numbers that turn unionized workers into a minority. The overall effect is to
tndermine unions’ capacity to hold strikes and halt production in order to pressure
managements to heed particular demands. Through contractual employment, managements
are able to use and turn the workers against each other.

‘The Labor Code, which was approved under the Marcos dictatorship, gives the Labor
Secretary the power to issue guidelines on contractual employment. The Herrera Law, which
Smended the Labor Code in 1989, did not remove this immense power from the Labor
Secretary and did not uphold workers’ regular employment. The sald power has been used
by Labor Secretaries to legalize contractual employment, virtually teaching capitalists on
Pn to contractualize work forces in a legal way. Under the present government of Benigno
Simeon Aquino Ill, Labor Secretary Rosalinda Baldoz has issued Department Order 18-A
Series of 2011 to legalize contractual employment.

‘As such, from the 1990s to the present, contractual employment has spread throughout the
country, Now, contractuals far outnumber the regular workers in the country. The service
Sector the biggest sector of the economy, has become a haven for contractualization,
especially the malls , fast food chains, and hotels. Special economic zones oF SEZs,
especially the export-processing zones among these, also rely heavily on contractualization,
here an estimated 80 to 90 per cent of workers are contractuals. Big agro-corporations
employ a huge number of contractuals. Contractualization has a woman's face, Since Mey
Work areas where contractual employment is rampant exhibit a high concentration of women
workers.


‘The government says it has to legalize contractual employment in order to attract foreign
tnd peal investors and therefore create jobs. It presses down workers’ wages and curtall
frade-union rights, which are also carried out with the legalization of contractualization, It is
telling that the government's so-called instrument for creating jobs is used by capitalists to
destroy jobs when they remove workers from work especially for forming unions and
standing up for their rights, The government also condones these instances of "job
Gestruction’ carried out by capitalists, belying its claim of championing job generation

Contractual employment has made it easier for capitalists to lay off workers and has
therefore contributed to the widespread unemployment in the country. This is most revolting
as the International Labor Organization's ‘Global Employment Trends 2014” shows that the
Philippines has the highest unemployment rate in all of Southeast Asia. Independent think-
tank Ibon Foundation has shown that unemployment has been growing under the Aquino
‘administration and that the jobs being generated have been decreasing. Unemployment
soared from 4.37 million in 2011 to 4.49 million in 2013 while job generation dropped from
41.2 million in 2011 to a mere 317,000 in the same year.

Contractualization has always figured in the major labor issues in the Philippines for the past
years. The Philippine Airlines retrenched 2,600 regular and unionized workers in order 10
Teplace them with contractual workers provided by subcontracting agencies suspected by
many to be dummy companies of the owner of the country's flag carrier. Numerous
Contractuals have been removed from work for fighting for their rights and for forming unions,
Those responsible for the death of 10 construction workers during the construction of the
Eton Towers in Makati City were not penalized, mainly because of pro-capitalist laws on
workers’ occupational health and safety and secondarily because of levels upon levels of
subcontracting,

In the meantime, however, workers’ job security should be upheld and regular employment
should be promoted. By making subcontracting agencies superfluous and making employers
responsible for their employees, this bill seeks to stop contractual employment and uphold
\workers’ rights to job security, Contractual employment is most exploitative and, most unjust
for workers, thereby most unacceptable to them and to the Filipino people. It must as such
be eradicated totally and not merely be reduced incrementally. The enactment of this
proposed measure is sought

Vos 6 chs (Os
REP. EMMI A. DE JESUS REPA.YZVIMINDA C. ILAGAN
Gabriela Women’s Party Gabriela Women’s Pa


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
First Regular Session

House Bit No__ 48.98

Introduced by Representatives EMMI A. DE JESUS and LUZVIMINDA C. ILAGAN

AN ACT PROHIBITING CONTRACTUALIZATION AND PROMOTING REGULAR
EMPLOYMENT

Be it enacted by the Senate and the House of Representatives of the Republic of the
Philippines in Congress assembled:

Section 1. The Article 106 of the Labor Code of the Philippines is hereby amended
as follows:

Article 106. Contractor or subcontractor is a person or an entity with
whom an employer or principal enters into a contract for the
performance of the latter's work.

When the contractor or subcontractor contracts to perform work that is
necessary and desirable for the business of the employer, the
employees or workers of the contractor or subcontractor shall be
considered the employees of the employer and not of the contractor or
subcontractor and for all intents and purposes, the contractor,
subcontractor, agency, person or intermediary shall be considered
merely as agent of the employer or the principal who shall be
responsible for the workers in the same manner and extent as if the
latter were directly employed by the said employer or principal.

{Whenever ah-employer-enters into-a-contract-with-anether person for-the
performance-of the former's-work-the-employees-of the-contracter-and-of the
latter's subcontractor, if any_shall-be-paid in-accordance-with-the-provisions-of
this-Code-

Hath {thatthe contractor or subcontractor fails to- pay-the- wages of his

employees in-accol - employer-shall-be jointly-and
severally tiable-with-hi track beentracter-to-such-employees-to-the



extent-ef the-work-performed-under the-contract, inthe same-mannerand
extent-that-he-is tiable-to-employees-directly-employed by him:

Fh retary-of Labor-and- Employment may, by-appropriate regulations;
festrict-or prohibit the-contracting-out-of Jabor-to-protect-the rights-of workers
established-under-this Gede_tn-so-prohibiting-or restrieting,he-may-make
appropriate-distinctions-betweentabs y-contracting-and-job-contracting-as
well as diffe tiations-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-oF ci wention-of any-provision-of thi
Geode:

There -isJabor-onlycontracting-where-the-person-supplying-werkers-to-an
employerdoes-not-have-substantial capital-or ag gi Aa ysl tat

equipment, machineries work-p -among-others-and-th
Se ee roe clgice wih are
directly-related te the-prin ; : ses-the
p or-intermediary-shall-b idered- merely-as-an-agentofthe

[Article-407_Indirect employer The p fh diately-preceding
.e-apply-to-any_person, partnership, association oF

corporation which_net bel 6 i

contractoi task; job-oF project,]

Section 3. Article 279 of the Labor Code of the Philippines is hereby amended to
read as follows:

Article 279.Security of tenure, — [lp-cases-of regular employment, the] NO
employer shall {ret] terminate the services of an employee except for a just
cause or when authorized by this Title. A[aJREGULAR employee who is
unjustly dismissed from work shalll 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 compensation was withheld from him up to the
time of his actual reinstatement.

Section 4. Article 280 of the Labor Code of the Philippines is hereby amended to
read as follows:

ARTICLE 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 in 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 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 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 shall continue while such activity exists.

"ANY STIPULATION IN ANY WRITTEN OR ORAL CONTRACT OF
EMPLOYMENT FOR A DEFINITE OR FIXED PERIOD DESIGNED TO
SUBVERT THE PROVISIONS OF THIS ACT AND COVERING WORK
ACTIVITIES WHICH ARE NECESSARY OR DESIRABLE IN THE USUAL
BUSINESS OR TRADE OF THE EMPLOYER AS DEFINED UNDER THIS.
TITLE SHALL BE NULL AND VOID AB INITIO.”

Section 5. Article 281 of the Labor Code of the Philippines is hereby amended to
read as follows

Article 281. Probationary employment. A [P}probationary employment shall
not exceed six (6) months from the [date the-employee-started working,
(eras .d-by-an-apprenticeship ag} ‘-stipulating-a4
period] FIRST DAY OF SERVICE FOR ALL WORKERS REGARDLESS OF
THE NATURE OF EMPLOYMENT, CONTINUOUS OR BROKEN. 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, shall be considered a regular
employee.

Section 6. Investigation and Enforcement. - The DOLE shall have the authority to
investigate and require the keeping of records necessary for the administration of
this Act. It shall issue such rules, regulations, orders and instructions as it deems

necessary and appropriate to carry out its responsibilities under this Act.

Section 7. Penalty. - Any violation of this Act shall be punished with a fine of not less
than fifty thousand pesos (P100,000.00) but not more than five hundred thousand
pesos (P500,000.00), or imprisonment of not less than three (3) months but not more
than two (2) years, or both at the discretion of the court. If the offense is committed
by a corporation, trust, firm, partnership or association or other entity, the penalty
shall be imposed upon the guilty officer or officers of such corporation, trust, firm,
partnership or association or entity.

Section 8. Separability Clause. - Should any provision herein be subsequently
declared invalid or unconstitutional, the same shall not affect the validity or the
legality of the other provisions not so declared


Section 9. Repealing Clause. - All laws, presidential decrees, executive orders, rules
and regulations, other issuances, and parts thereof, which are inconsistent with the
provisions of this Act, are hereby repealed and modified accordingly.

Section 10. Effectivity. - This Act shall take effect fifteen (15) days after publication
in the Official Gazette or in at least (2) newspapers of general circulation.