Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

‘THIRTEENTH CONGRESS
First Regular Session

upno,_380

Introduced by Rep. Roseller L. Barinaga

EXPLANATORY NOTE

Workers hired by agencies through the job contracting scheme are the most underpaid,
neglected and oppressed among the countrys labor force.

Many of them toil endlessly for years in a company they cannot even call their employer.
‘Their hard work is compensated with 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 tum into illusions -
grave scandal that ust be stopped. Werkers hired through job contractors must receive all

Against such backdrop, this bill amends Article 106 of Presidential Decree 442 (Labor Code
of the Philippines), as amended.

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 tum to the company
for relief.

In view pf the foregoing, early approval of this bill is eamestly sought.

sentative
District, Zamboanga del Norte


Congress of the Philippines)

Thirteenth Congress )
First Regular Session )
HOUSE OF REPRESENTATIVES
upno, 380
Introduced by Rep. Roselier L. Barinaga
AN ACT

EXPANDING THE LIABILITIES OF INDIRECT EMPLOYERS IN JOB
CONTRACTING, COVERING OTHER BENEDITS DUE THEIR EMPLOYEES,
FOR THIS PURPOSE AMENDING ARTICLE 106 OF PRESIDENTIAL DECREE
442, AS AMENDED, OTHERWISE 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 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
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
ligble 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 OF SUBCONTRACTOR HAVE RENDERED AT LEAST ONE
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,
OTHER BENEFITS SHALL BE IN ACCORDANCE WITH EXISTING LAWS.

‘The Secretary of Labor AND EMPLOYMENT may, by sppropriation
regulations, restrict of prohibit the contracting out of Isbor to protect the rights of

“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
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
5 an agent of the employer who shall be responsible to the workers in the same
‘manner and extent as ifthe latter were directly employed by him.”

SEC. 2. If any provision of this Act is held unconstitutional, other provisions not
affected thereby shall remain valid and binding.

SEC. 3. All laws, presidential decrees, rules and regulations insofar
inconsistent with this Act, are hereby repealed, amended or modified accordingly. = ey ae

SEC. 4. This Act shall take effect fifteen (15) days following its publication in the
Official Gazette or two (2) newspapers of general circulation, whichever comes first.

Approved.