Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS,
Second Regular Session

HOUSE BILL No, 53.40

INTRODUCED BY ANAKPAWIS PARTY-LIST
REPRESENTATIVE FERNANDO L. HICAP

EXPLANATORY NOTE

Aside from being a Constitutional right, security of tenure is one of the very
few legal protections for Filipino workers inscribed in our laws. Despite this, loc:
and foreign-owned companies continue to violate these laws by enforcing various
forms of labor flexibilization and labor contractualization schemes.

Contractual employment schemes can be viewed as the micro-economic
firm-level aspect of the continuing and worsening economic restructuring of the
world economy that is part of the macro-level liberalization, deregulation and
privatization policies of neoliberal globalization. Labor flexibilization pertains to
innovations in work organization and employment schemes associated with the
adoption of new production technologies and/or human resource management
designed to extract greater profits prompted by increasing global competition and
crisis.

These profit maximization schemes include _labor-only-contracting,
subcontracting, hiring of casuals and contractuals, hiring of apprentices so that in
the Philippines labor flexibilization is used synonymously with “contractualization”
or “casualization” of labor. While labor flexibilization may garner superprofits for
the big capitalists, it increases the exploitation of workers, poses obstacles to their
genuine unionization, and raises the rate of unemployment and underemployment.

According to the International Labor Forum, “the use of contract labor and
“precarious work” is part of the global business strategy to undermine decent work
and cut labor costs through labor market “flexibilization” or 'casualization’.”

In the past decade, contractual employment proliferated due to the
neoliberal policies of globalization. In fact, a big chunk of locally-generated
employment is attributed to contractual or temporary jobs across industries
particularly in special economic zones, the service sector and industries
concentrated on export-oriented production mainly of semi-manufactures with little
value-added.

Contractual employment is an employment strategy that aggravates
domestic unemployment by destroying regular and permanent jobs while exposing
contractual or temporary workers to substandard and inhumane working
conditions.


In general, contractualization is aimed at pressing down workers’ wages and
increasing capitalists’ profits.

In particular, it is aimed at the following: 1) weakening trade unionism
through the reduction of the traditional base of trade unions which are permanent
workers; 2) systematic and efficient co-opting of workers into subscribing to an
ideology that attacks workers’ organization and unionism (employment vs. union
mentality); 3) depriving workers of benefits and wages that are due to regular
workers and the possibility of improving their working conditions through
unionism and collective bargaining and; 4) allowing capitalists to earn maximum
profits and lessen the impact of economic crisis by constant adjustments in current
and long-term production costs through wage reduction and elimination of workers’
benefits from long-term employment.

To understand the core of contractualization as an employer strategy, it is
important to realize that the entire framework of labor law, including international
labor law, is based on permanent employer-employee relationships.

Contractualization is not a mere short-term tactic to reduce costs or to
defeat a union organizing drive, but a long-term strategy for shedding all
obligations to workers and eliminating all employee rights based on the existence of
an employment relationship. It thereby removes various obstacles to the extreme
exploitation of workers which they have won through decades of struggle:

Based on recent studies, contractualization is extensive in the Philippines,
with 7 out of 10 firms implementing combinations of flexible work arrangements,
and with estimates showing that contractuals now outnumber regulars among
Filipino workers. As labor groups and advocates have described, contractualization
is a dagger in the hearts of Filipino workers.

Large corporations such as Shoemart (SM), a retail company owned by
Philippines’ richest Filipino, Henry Sy, is notorious for employing contractual
employees with shortened employment tenures of 3 to 5 months.

In 2011, the Philippine Airlines (PAL), the country’s flag carrier have
succeeded in outsourcing its ground operations that retrenched 6,000 regular
employees in favor of contractual workers.

Majority of the country’s 37.6 million employed persons are either employed
in contractual, temporary, probationary, seasonal and odd jobs. Based on official
government data, an estimate of 44% of workers employed in various industries are
not regulars. The rate of contractual employment is also high in the construction
sector (81%) and quarrying sector (59%).

With this reality, the State must determinedly protect and uphold workers’
rights to decent and long-term employment by protecting their security of tenure,
declaring illegal all forms of contractual employment and penalizing those who will
continue to carry out this anti-worker scheme.


With the end in view of uplifting the Filipino workers from deepening poverty
and misery, prohibiting contractualization, fundamentally, shall protect. the
national interest and democratic ideals of Filipino society.

In view of the foregoing, the passage of this proposal is earnestly sought.

\4
b. AV
FERNANDO L.

Anakpawis Party-lis


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
Second Regular Session

House Bu no, 51.49

INTRODUCED BY ANAKPAWIS PARTY-LIST
REPRESENTATIVE FERNANDO L. HICAP

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 busine: 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.

Section 2, The Article 107 of the Labor Code of the Philippines is hereby repealed.

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

Article 279. Security of tenure. ~ NO employer shall terminate the services of
an employee except for a just cause or when authorized by this Title. A
REGULAR employee who is unjustly dismissed from work shall be entitled to
IMMEDIATE reinstatement without loss of seniority rights and other
privileges, to his/her full back wages inclusive of allowances, and to his/her
other benefits or their monetary equivalent computed from the time his/her
compensation was withheld from him up to the time of his/her 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/she is
employed and his/her employment shalll 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 probationary employment shall not
exceed six (6) months from the 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 catuse or when
he/she 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/her 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 Clause. - This Act shall take effect fifteen (15) days after
publication in the Official Gazette or in at least (2) newspapers of general
circulation.