Republic of the Philippines
HOUSE OF REPRESENTATIVES

Quezon City
FIFTEENTH CONGRESS
First Regular Session

House Bill No,_ 2459

Introduced by Hon, Nelson L. Dayanghirang

EXPLANATORY NOTE

The mandate of the constitution, under Article, XI11, Sec. 3, is clear "The State
shall afford full protection to labor, local and overseas, organized, and promote full
employment and equality of employment opportunities for all”

This bill seeks 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
tum to the company for relief.

Its passage is earnestly requested.



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City
FIFTEENTH CONGRESS
First Regular Session

House Bill No,_2459

Introduced by Hon. Nelson L. Dayanghirang

AN ACT
EXPANDING THE LIABILITIES OF INDIRECT EMPLOYERS IN JOB
CONTRACTING, COVERING OTHER BENEFITS 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 a contract with another person for or 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.


IF THE EMPLOYEES OF THE CONTRACTOR OR SUBCONTRACTOR HAVE
RENDERED AT LEAST ONE YEAR (1) 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 appropriate 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 Iabor-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 worker in the same manner and
extent as if the latter were directly employed by him."

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

SECTION 3. All laws, presidential decrees, rules and regulations insofar as they are
inconsistent with this Act, are hereby repealed, amended or modified accordingly.

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

Approved,