D

R GE WEBa

Republic of the Philippines
House of Representatives
Quezon City, Metro Manila

EIGHTEENTH (18) CONGRESS.
First Regular Session

HOUSE BILL NO. 3032

Introduced by REP. JOSE CHRISTOPHER Y. BELMONTE.

EXPLANATORY NOTE

In the 17" Congress, several measures were filed to amend Presidential Decree No. 442

or the Labor Code of the Philippines to end contractualization in the country. House Bill No.
6908 substituted at least 26 bills filed in the House of Representatives — House Bills Numbered
55, 76, 170, 341, 556, 563, 709, 712, 895, 916, 1045, 1351, 1563, 1837, 1857, 1910, 2389,
3556, 3769, 3802. 4443. 4444, 5130, 5264, and 5899. This bill was approved on third and final
reading by both chambers of Congress.

Despite the approval by both Houses of the Security of Tenure Bill, the President has

vetoed the bill and has sent it back to the Congress. This bill acknowledges the need to pass a
Security of Tenure Bill and to strengthen provisions provided in the Constitution.

Section 18, Article I] of the 1987 Constitution provides for the State’s duty to protect

the rights of workers and promote their welfare, in lieu of the recognition that labor is the
country’s primary socioeconomic force. Section 3, Article XIII further provides that workers
shall be entitled to security of tenure, humane conditions of work, and a living wage. The same
section also specifies that:

“The State shall regulate the relations between workers and employers,
recognizing the right of labor to its just share in the fruits of production and the
right of enterprises to reasonable returns on investments, and to expansion and
growth.”

The right of Filipino laborers to security of tenure is enshrined in our Constitution. But

contractualization or “endo” still persists in various industries in the country. In spirit of
‘competition and profit gains, employers have taken advantage of the gray areas in the laws and
continuously circumvented the workers’ right to security of tenure.

This bill aims to correct loopholes in the law and ensure that we put an end to all forms


of contractutalization. By ending contractualization, the bill gives way to the abolition of all the
abusive and unfair labor practices that comes with it, All employees will be regularized and will
be granted benefits of regular employees such as minimum wage, retirement pay, 13" month
pay, overtime pay, night shift differential, matemity and paternity leaves, and mandatory
payment of SSS, PAG-IBIG, and Philhealth contributions.

This bill will provide more stable jobs and incomes to every Filipino.

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

SGibmrde


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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH (18%) CONGRESS
First Regular Session
3032

HOUSE BILL NO.

Introduced by REP. JOSE CHRISTOPHER Y. BELMONTE

AN ACT
STRENGTHENING THE SECURITY OF TENURE OF WORKERS IN THE PRIVATE
SECTOR, AMENDING FOR THE PURPOSE ARTICLES 248, 279, 280, 281 AND 288,
AND INTRODUCING NEW ARTICLES 106-A, 106-B, 106-C, 106-D, 106-E, 280-A AND
280-B TO PRESIDENTIAL DECREE NO. 442, AS AMENDED, OTHERWISE KNOWN
AS THE LABOR CODE OF THE PHILIPPINES

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

SECTION 1. - Article 106 of the Labor Code is hereby repealed and substituted as follows:

“IART. 106. Contractor of 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 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.


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“The Secretary of Labor and Employment may, by appropriate regulations, restrict or
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, to prevent any violation or circumvention of any
provision of this Code.

“There is a “labor-only’ only contracting where the persons 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 placed by such
persons and performing activities which are directly related to the principal business of
such employer. In such cases, the persons 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. }

“ART. 106. CONCEPT AND NATURE OF SUBCONTRACTING
ARRANGEMENTS. - IN LEGITIMATE SUBCONTRACTING, THERE EXISTS
A TRILATERAL RELATIONSHIP UNDER WHICH THERE IS A CONTRACT
FOR A SPECIFIC JOB, WORK OR SERVICE BETWEEN THE PRINCIPAL
AND THE SUBCONTRACTOR, AND A CONTRACT OF EMPLOYMENT
BETWEEN THE SUBCONTRACTOR AND ITS WORKERS. HENCE, THERE
ARE THREE PARTIES INVOLVED IN THESE ARRANGEMENTS: THE
PRINCIPAL WHICH DECIDES TO FARM OUT A JOB OR SERVICE TO A
SUBCONTRACTOR WHICH HAS THE CAPACITY TO INDEPENDENTLY
UNDERTAKE AND ACTUALLY UNDERTAKES THE PERFORMANCE OF
THE JOB, WORK OR SERVICE, AND THE CONTRACTUAL WORKERS
ENGAGED BY THE SUBCONTRACTOR TO ACCOMPLISH THE JOB, WORK
OR SERVICE.

“FOR PURPOSES OF THIS CODE, ‘SUBCONTRACTING’ REFERS TO AN
ARRANGEMENT WHEREBY:

(A) A PRINCIPAL AGREES TO PUT OUT OR FARM OUT WITH A
SUBCONTRACTOR THE PERFORMANCE OR COMPLETION OF A
SPECIFIC JOB, WORK OR SERVICE WITHIN A DEFINITE OR
PREDETERMINED PERIOD; REGARDLESS OF WHETHER SUCH JOB,
WORK OR SERVICE IS TO BE PERFORMED OR COMPLETED WITHIN
OR OUTSIDE THE PREMISES OF THE PRINCIPAL; OR


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(B) A PERSON, PARTNERSHIP, ASSOCIATION OR CORPORATION WHICH
NOT BEING A PRINCIPAL, CONTRACTS WITH A SUBCONTRACTOR
FOR THE PERFORMANCE OF ANY WORK, TASK, JOB OR PROJECT.”

SEC.2. — A new Article 106-A is hereby inserted in the Labor Code to read as follows

“ART. 106 - A. RIGHTS AND LIABILITIES OF PARTIES. - (A.) THE
SUBCONTRACTED EMPLOYEE, IN ALL CASES, SUBCONTRACTED
EMPLOYEES SHALL BE ENTITLED TO ALL RIGHTS AND PRIVILEGES
DUE TO REGULAR EMPLOYEES INCLUDING THE FOLLOWING:

1, SAFE AND HEALTHFUL WORKING CONDITIONS;

2. LABOR STANDARDS SUCH AS SERVICE INCENTIVE LEAVES, REST
DAYS, OVERTIME PAY, HOLIDAY PAY, THIRTEENTH MONTH PAY
AND SEPARATION PAY;

3. RETIREMENT BENEFITS;

4, SOCIAL SECURITY AND WELFARE BENEFITS;

5. SELF-ORGANIZATION, COLLECTIVE BARGAINING AND

6. SECURITY OF TENURE.

“IN ADDITION, SUBCONTRACTED EMPLOYEES SHALL HAVE THE RIGHT
TO A WRITTEN CONTRACT WHICH SHALL INCLUDE THE FOLLOWING
TERMS AND CONDITION:

1. THE SPECIFIC DESCRIPTION OF THE JOB, WORK, OR SERVICE TO BE
PERFORMED BY THE CONTRACTUAL EMPLOYEE;

2, THE PLACE OF WORK AND TERMS AND CONDITIONS OF
EMPLOYMENT, INCLUDING A STATEMENT OF THE WAGE RATE
APPLICABLE TO THE INDIVIDUAL CONTRACTUAL EMPLOYEE;

3. THE TERM OR DURATION OF EMPLOYMENT WHICH SHALL BE CO-
EXTENSIVE WITH THE CONTRACT OF THE PRINCIPAL AND
SUBCONTRACTOR OR WITH THE SPECIFIC PHASE FOR WHICH THE
CONTRACTUAL EMPLOYEE IS ENGAGED, AS THE CASE MAY BE.

“THE SUBCONTRACTED EMPLOYEE SHALL BE INFORMED BY THE
SUBCONTRACTOR OF THE FOREGOING TERMS AND CONDITIONS ON
OR BEFORE THE FIRST DAY OF HIS EMPLOYMENT.

“(B.) THE PRINCIPAL AND THE SUBCONTRACTOR. THE LEGITIMATE

SUBCONTRACTOR SHALL BE CONSIDERED THE EMPLOYER OF THE


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CONTRACTUAL EMPLOYEE FOR PURPOSES OF ENFORCING THE
PROVISIONS OF THE LABOR CODE AND OTHER SOCIAL LEGISLATION.
IN ALL CASES OF SUBCONTRACTING, HOWEVER, THE PRINCIPAL
SHALL BE SOLIDARILY LIABLE WITH THE CONTRACTOR IN THE EVENT
OF ANY VIOLATION OF ANY PROVISION OF THE LABOR CODE,
INCLUDING THE FAILURE TO PAY WAGES.

“THE PRINCIPAL SHALL BE DEEMED THE EMPLOYER OF THE
CONTRACTUAL EMPLOYEE IN ANY OF THE FOLLOWING CASES:

L ‘WHERE THERE IS LABOR-ONLY CONTRACTING; OR

i IN THE ABSENCE OF THE WRITTEN CONTRACT REQUIRED BY
ARTICLE 106-A; OR

I. IN CASES OF VIOLATION OF ARTICLE 106 - B.

“IN ADDITION, THE PRINCIPAL SHALL BE SOLIDARILY LIABLE WITH
THE SUBCONTRACTOR IN CASE THE CONTRACT BETWEEN THE
PRINCIPAL AND SUBCONTRACTOR IS PRE-TERMINATED FOR REASONS
NOT ATTRIBUTABLE TO THE FAULT OF THE SUBCONTRACTOR.”

SEC.3. — A new Article 106-B is hereby inserted in the Labor Code to read as follows:

“ART. 106-B. PROHIBITION AGAINST LABOR-ONLY SUBCONTRACTING. —
ENGAGING IN LABOR-ONLY CONTRACTING OR CONTRACTING WITH A
LABOR-ONLY CONTRACTOR IS STRICTLY PROHIBITED. FOR THIS
PURPOSES, LABOR-ONLY CONTRACTING REFERS TO AN
ARRANGEMENTS WHERE THE SUBCONTRACTOR MERELY RECRUITS,
SUPPLIES OR PLACES WORKERS TO PERFORM A JOB, WORK OR
SERVICE FOR A PRINCIPAL, INCLUDING INSTANCES WHERE ANY OF
THE FOLLOWING IS PRESENT:

(A) THE SUBCONTRACTOR DOES NOT HAVE SUBSTANTIAL CAPITAL
AND INVESTMENT WHICH RELATES TO THE JOB, WORK OR
SERVICE TO BE PERFORMED.

(B) THE EMPLOYEES RECRUITED, SUPPLIED OR PLACED BY SUCH
SUBCONTRACTOR ARE PERFORMING ACTIVITIES WHICH ARE
DIRECTLY RELATED TO THE USUAL BUSINESS OF THE PRINCIPAL;
OR

(C) THE PRINCIPAL HAS THE RIGHT TO CONTROL, WHETHER
EXERCISED OR NOT, NOT ONLY THE END TO BE ACHIEVED, BUT


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ALSO THE MANNER AND MEANS TO BE USED IN REACHING THAT
END.

“AS USED IN THIS CODE, ‘SUBSTANTIAL CAPITAL AND INVESTMEN’
SUBCONTRACTING ARRANGEMENTS REFERS TO TOOLS, EQUIPMENTS,
IMPLEMENTS, MACHINERIES AND WORK PREMISES ACTUALLY AND
DIRECTLY USED BY THE SUBCONTRACTOR IN THE PERFORMANCE OR
COMPLETION OF THE JOB, WORK OR SERVICE CONTRACTED OUT. THE
USE OF THE SUBCONTRACTOR OF THE EQUIPMENT, FACILITIES,
MACHINERIES AND TOOLS OF THE PRINCIPAL IS AN INDICATION THAT
THE SUBCONTRACTOR HAS NO SUBSTANTIAL CAPITAL AND
INVESTMENT. THE EXISTENCE OF CAPITAL STOCKS AND SUBSCRIBED
CAPITALIZATION IN RELATION TO CORPORATIONS ENGAGED IN
SUBCONTRACTING DOES NOT ITSELF CONSTITUTION SUBSTANTIAL
CAPITAL AND INVESTMENT.

“AS USED IN THIS CODE, THE ‘RIGHT TO CONTROL’ IN
SUBCONTRACTING ARRANGEMENTS SHALL REFER TO THE RIGHT
RESERVED TO THE PERSON WHOM THE SERVICES OF THE
CONTRACTUAL WORKERS ARE PERFORMED TO DETERMINE NOT
ONLY THE END TO BE ACHIEVED BUT ALSO THE MANNER AND MEANS
TO BE USED IN REACHING THAT END.”

SEC. 4. — A new Article 106-C is hereby inserted in the Labor Code to read as follows:

“ART. 106-C. PROHIBITIONS IN SUBCONTRACTING ARRANGEMENTS. —
REGARDLESS OF COMPLIANCE WITH THE IMMEDIATELY PRECEDING
ARTICLE , THE FOLLOWING ACTS SHALL BE PROHIBITED FOR BEING
CONTRARY TO LAW OR PUBLIC POLICY:

(A) ENGAGING OR MAINTANING BY THE PRINCIPAL OF
SUBCONTRACTED EMPLOYEES IN EXCESS OF TWENTY PERCENT
(20%) OF THE PRINCIPAL’S TOTAL WORKFORCE PROVIDED THAT
SUCH SUBCONTRACTED EMPLOYEES DO NOT PERFORM WORK
THAT IS NECESSARY OR DESIRABLE OR DIRECTLY RELATED TO
THE USUAL BUSINESS OR TRADE OR BUSINESS OF THE EMPLOYER.

(B) CONTRACTING OUT OF A JOB, WORK OR SERVICE WHEN THE
SAME RESULTS IN THE TERMINATION OF REGULAR EMPLOYEES


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AND REDUCTION OF WORK HOURS OR REDUCTION OR SPLITTING
OF THE BARGAINING UNIT;

CONTRACTING OUT OF WORK WITH A ‘CABO’. FOR THIS PURPOSE
‘CABO’ REFERS TO A PERSON OR GROUP OF PERSONS OR TO A
LABOR GROUP WHICH, IN THE GUISE OF A LABOR ORGANIZATION
OR COOPERATIVE, SUPPLIES WORKERS TO AN EMPLOYER WITH
OR WITHOUT ANY MONETARY OR OTHER CONSIDERATION,
‘WHETHER IN THE CAPACITY OF AN AGENT OF THE EMPLOYER, OR
AS AN OSTENSIBLE INDEPENDENT CONTRACTOR.

TAKING UNDUE ADVANTAGE OF THE ECONOMIC SITUATION OR
LACK OF BARGAINING STRENGHT OF THE CONTRACTUAL
EMPLOYEE, OR UNDERMINING HIS SECURITY OF TENURE OR
BASIC RIGHTS, OR CIRCUMVENTING THE PROVISIONS OF
REGULAR EMPLOYMENT, IN ANY OF THE FOLLOWING INSTANCES:

L IN ADDITION TO HIS ASSIGNED FUNCTIONS, REQUIRING
THE CONTRACTUAL EMPLOYEE TO PERFORM FUNCTIONS
WHICH ARE CURRENTLY BEING PERFORMED BY THE
REGULAR EMPLOYEES OF THE PRINCIPAL OR OF THE
SUBCONTRACTOR;

i REQUIRING HIM TO SIGN, AS A PRECONDITION TO
EMPLOYMENT OR CONTINUED EMPLOYMENT, AN
ANTEDATED RESIGNATION LETTER, A BLANK PAYROLL, A
WAIVER OF LABOR STANDARDS INCLUDING MINIMUM
WAGES AND SOCIAL WELFARE BENEFITS, OR A QUITCLAIM
RELEASING THE PRINCIPAL OR SUBCONTRACTOR FROM
ANY LIABILITY AS TO THE PAYMENT OF FUTURE CLAIMS;
AND

Hi. | REQUIRING HIM TO SIGN A CONTRACT FIXING THE PERIOD
OF EMPLOYMENT TO A TERM SHORTER THAN THE TERM
OF THE CONTRACT BETWEEN THE PRINCIPAL AND THE
CONTRACTOR, UNLESS THE LATTER CONTRACT IS
DIVISIBLE INTO PHASES FOR WHICH SUBSTANTIALLY
DIFFERENT SKILLS ARE REQUIRED AND THIS IS MADE
KNOWN TO THE EMPLOYEE AT THE TIME OF
ENGAGEMENT.


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(E) CONTRACTING OUT OF A JOB, WORK OR SERVICE THROUGH
pee AGENCY WHICH REFERS TO A:
SUBCONTRACTOR ENGAGED IN THE SUPPLY OF LABOR
WHICH IS OWNED, MANAGED AND CONTROLLED BY THE
PRINCIPAL; OR

tL SUBCONTRACTOR IN WHICH THE PRINCIPAL OWNS OR
OTHERWISE REPRESENTS ANY SHARE OF STOCK; OR

11, SUBCONTRACTOR WHICH OPERATES SOLELY FOR THE
PRINCIPAL.

(F) CONTRACTING OUT OF A JOB, WORK OR SERVICE THAT IS
NECESSARY AND DESIRABLE OR DIRECTLY RELATED TO THE
BUSINESS OR OPERATION OF THE PRINCIPAL;

(G) CONTRACTING OUT OF A JOB, WORK OR SERVICE BEING
PERFORMED BY OR PREVIOUSLY PERFORMED BY REGULAR
EMPLOYEES AND/OR MEBERS OF THE BARGAINING UNIT.”

SEC. 5. - A new 106-D is hereby inserted in the Labor Code to read as follows’

“ART. 106 — D. REGISTRATION OF SUBCONTRACTOR. - (A.) MANDATORY
REGISTRATION. 1T SHALL BE MANDATORY FOR ALL PERSONS OR
ENTITIES ACTING AS SUBCONTRACTORS TO REGISTER UNDER A
REGISTRATION HEREBY ESTABLISHED TO GOVERN CONTRACTING
ARRANGEMENTS AND TO BE IMPLEMENTED BY THE REGIONAL
OFFICES OF THE DEPARTMENT OF LABOR AND EMPLOYMENT.

“NON-REGISTERED PERSONS OR ENTITIES ACTING AS
SUBCONTRACTORS SHALL BE DEEMED AS _ LABOR-ONLY
CONTRACTORS. MERE REGISTRATION WITHOUT A SHOWING OF
COMPLIANCE WITH ALL REQUIREMENTS FOR LEGITIMATE
SUBCONTRACTING AND AVOIDANCE OF ALL PROHIBITIONS OF


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SUBCONTRACTING SHALL NOT INDICATE LEGITIMATE
SUBCONTRACTING.

“(B) REQUIREMENTS FOR REGISTRATION, A SUBCONTRACTOR MAY BE
LISTED IN THE REGISTRY OF SUBCONTRACTORS UPON COMPLETION

AND SUBMISSION OF AN APPLICATION FORM PROVIDED BY THE
DEPARTMENT. IN THE APPLICATION FORM, THE APPLICANT
SUBCONTRACTOR SHALL PROVIDE THE FOLLOWING INFORMATION:

L THE NAME AND BUSINESS ADDRESS OF THE APPLICANT AND THE
AREA OR AREAS WHERE IT SEEKS TO OPERATE;

t. THE NAMES AND ADDRESSES OF OFFICERS, IF THE APPLICANT IS
A CORPORATION PARTNERSHIP, COOPERATIVE OR UNION;

1. THE NATURE OF THE APPLICANT'S BUSINESS AND THE INDUSTRY
OR INDUSTRIES WHERE THE APPLICANT SEEKS TO OPERATE;

IV. THE NUMBER OF REGULAR WORKERS, THE LIST OF CLIENTS, IF
ANY, THE NUMBER OF PERSONNEL ASSIGNED TO EACH CLIENT,
IF ANY, AND THE SERVICES PROVIDED TO THE CLIENT;

v. THE DESCRIPTION OF THE PHASES OF THE CONTRACT AND THE
NUMBER O EMPLOYEES COVERED IN EACH PHASE, WHERE
APPROPIATE; AND

Vi A COPY OF AUDITED FINANCIAL STATEMENTS IF THE
APPLICANT IS A CORPORATION, PARTNERSHIP, COOPERATIVE
OR A UNION, OR A COPY OF THE LATEST INCOME TAX RETURN IF
THE APPLICANT IS A SOLE PROPRIETORSHIP.

“THE APPLICATION SHALL BE SUPPORTED BY THE FOLLOWING:

L A CERTIFIED COPY OF A CERTIFICATE OF REGISTRATION OF
FIRM OR BUSINESS NAME FROM THE SECURITIES AND
EXCHANGE COMMISSION (SEC), DEPARTMENT OF TRADE AND
INDUSTRY (DTI), COOPERATIVE DEVELOPMENT AUTHORITY
(CDA), OR FROM THE DOLE IF THE APPLICANT IS A UNION; AND


i A CERTIFIED COPY OF THE LICENSE OR BUSINESS PERMIT
ISSUED BY THE LOCAL GOVERNMENT UNIT OR UNITS WHERE
THE SUBCONTRACTOR OPERATES.

“THE APPLICATION SHALL BE VERIFIED AND SHALL INCLUDE AN
UNDERTAKING THAT THE SUBCONTRACTORS SHALL ABIDE BY ALL
APPLICABLE LABOR LAWS AND REGULATIONS.

“(C.) FILING AND PROCESSING OF APPLICATIONS, THE APPLICATION

AND ITS SUPPORING DOCUMENTS SHALL BE FILED IN TRIPLICATE IN
THE REGIONAL OFFICES WHERE THE APPLICANT PRINCIPALLY
OPERATES. NO APPLICATION FOR REGISTRATION SHALL BE
ACCEPTED UNLESS ALL THE FOREGOING REQUIREMENTS ARE
COMPLIED WITH. THE SUBCONTRACTOR SHALL BE DEEMED
REGISTERED UPON PAYMENT OF A REGISTRATION FEE TO BE
DETERMINED BY THE REGIONAL OFFICE.

“WHERE ALL THE SUPPORTING DOCUMENTS HAVE BEEN SUBMITTED,
THE REGIONAL OFFICE MAY DENY OR APPROVE THE APPLICATION
WITHIN SEVEN (7) WORKING DAYS AFTER ITS FILING.

“UPON REGISTRATION, THE REGIONAL OFFICE SHALL RETURN ONE
SET OF THE DULY-STAMPED APPLICATION DOCUMENTS TO THE
APPLICANT, RETAIN ONE SET FOR ITS FILE, AND TRANSMIT THE
REMAINING SET TO THE BUREAU OF LOCAL EMPLOYMENT. THE
BUREAU SHALL DEVICE THE NECESSARY FORMS FOR THE
EXPEDITOUS PROCESSING OF ALL APPLICATIONS FOR REGISTRATION.

“D.) ANNUAL REPORTING OF REGISTERED CONTRACTORS. THE
SUBCONTRACTOR SHALL SUBMIT IN TRIPLICATED COPIES AN ANNUAL
REPORT USING A PRESCRIBED FORM TO THE APPROPRIATE REGIONAL
OFFICE NOT LATER THAN THE FIFTEENTH OF JANUARY OF THE
FOLLOWING YEAR. THE REPORT SHALL INCLUDE THE FOLLOWING
DOCUMENTS:

L A LIST OF CONTRACTS ENTERED WITH THE PRINCIPAL DURING
THE SUBJECT REPORTING PERIOD;

LA THE NUMBER OF WORKERS COVERED BY EACH CONTRACT
WITH THE PRINCIPAL;


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tl. A SWORN STATEMENT SIGNED BY THE HIGHEST EXECUTIVE
OFFICER AND THE CHIEF FINANCIAL OFFICER THAT THE
SUBCONTRACTOR HAS REMITTED ALL KINDS OF PAYMENTS AND
PREMIUMS TO THE SOCIAL SECURITY SYSTEM (SSS), THE HOME
DEVELOPMENT MUTUAL FUND (HDMF), PHILHEALTH,
EMPLOYEES COMPENDATION COMMISSION (ECC), AND THE
BUREAU OF INTERNAL REVENUE (BIR) FOR ALL CONTRACTUAL
EMPLOYEES PERTAINING TO THE REPORTIN PERIOD.

“THE REGIONAL OFFICE SHALL RETURN ONE SET OF THE DULY-
STAMPED REPORT TO THE SUBCONTRACTOR, RETAIN ONE SET FOR ITS
FILE, AND TRANSMIT THE REMAINING SET TO THE BUREAU OF LOCAL
EMPLOYMENT WITHIN FIVE (5) DAYS FROM RECEIPT THEREOF.

“(E.) DELISTING OF CONTRACTORS OR SUBCONTRACTORS. THE
REGIONAL DIRECTOR SHALL CANCEL THE REGISTRATION OF
SUBCONTRACTORS BASED ON ANY OF THE FOLLOWING GROUNDS:

L NON-SUBMISSION OF CONTRACTS BETWEEN THE PRINCIPAL AND
THE SUBCONTRACTORS WHEN REQUIRED TO DO SO;

I NON-SUBMISSION OF THE ANNUAL REPORT INCLUDING THE
DOCUMENTS LISTED UNDER ARTICLE 106 (D);

1. | ENGAGEMENT IN LABOR-ONLY CONTRACTING;

IV. VIOLATION OF THE PROHIBITED ACTIVITIES PROVIDED BY THIS
CODE;

Vv. NON-COMPLIANCE WITH LABOR STANDARDS AND WORKING
CONDITIONS.

“(F.) RENEWAL OF REGISTRATION OF SUBCONTRACTORS. ALL
REGISTERED SUBCONTRACTORS MAY APPLY FOR RENEWAL OF
REGISTRATION EVERY TWO (2) YEARS. FOR THIS PURPOSE, THE
TRIPARTITE INDUSTRIAL PEACE COUNCIL (TIPC) AS CREATED UNDER
EXECUTIVE ORDER NO. 49, SHALL SERVE AS THE OVERSIGHT
COMMITTEE TO VERIFY AND MONITOR THE FOLLOWING:

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1 L ENGAGING IN ALLOWABLE CONTRACTING ACTIVITIES; AND

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3 i COMPLIANCE WITH ADMINISTRATIVE REPORTING
4 REQUIREME! f

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6 SEC.6.— A new Article 106-E is hereby inserted in the Labor Code to read as follows:

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8 “ART. 106-E. DUTY TO PRODUCE COPY OF CONTRACT. - THE PRINCIPAL
9 OR SUBCONTRACTOR SHALL PRODUCE A COPY OF THE CONTRACT
10 BETWEEN THE PRINCIPAL AND THE CONTRACTOR IN THE COURSE OF
11 INSPECTION. THE SUBCONTRACTOR SHALL ALSO PRODUCE A COPY OF
12 THE CONTRACT OF EMPLOYMENT OF SUBCONTRACTED WORKERS
13 WHEN DIRECTED TO DO SO BY THE REGIONAL DIRECTOR OR HIS
14 AUTHORIZED REPRESENTATIVE.

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16 “A COPY OF THE CONTRACT BETWEEN THE SUBCONTRACTED
7 EMPLOYEE AND THE SUBCONTRACTOR SHALL BE FURNISHED TO THE
18 CERTIFIED BARGAI iG AGENT, IF THERE IS ANY.

20 SEC. 7. - Article 248 of the Labor Code is hereby amended to read as follows:
21

22 “ART. 248. Unfair Labor Practices of Employers. — It shall be unlawful for an
23 employer to commit any of the following unfair labor practices:

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25 (a) To interfere with, restrain or coerce employees in the exercises of their right to self-
26 organization;

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28 (b) To require as a condition of employment that a person or an employee shall not join a
29 labor organization or shall withdraw from one to which he belongs;

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31 (c) To ENGAGE A LABOR-ONLY CONTRACTOR OR TO contract out services,
32 function being performed by [union] MEMBERS OF, OR POSITION COVERED
33 BY, THE BARGAINING UNIT AND/OR REGULAR RANK-AND-FILE AND
34 SUPERVISORY EMPLOYEES [when such will interfere with, restrain or coerce
35 employees in the exercise of their rights to self-organization]

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37 (d) To initiate, dominate, assist or otherwise interfere with the formation or
38 administration of any labor organization, including the giving of financial or other

39 support to it or its organizers or supporters;
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(e) To discriminate in regard to wages, hours of work and other terms and conditions of
employment in order to encourage or discourage membership in any labor
organization. Nothing in this Code or in any other law shall stop the parties from
requiring membership in a recognized collective bargaining agent as a condition of
employment, except those employees who are already members of another union at
the time of the signing of the collective bargaining agreement.

Employees of an appropriate bargaining unit who are not members of the recognized
collective bargaining agent may be assessed a reasonable fee equivalent to the dues
and other fees paid by members of the recognized collective bargaining agent, if such
non-union members accept the benefits under the collective bargaining agreement:
Provided, That the individual authorization required under Article 242, paragraph (0)
of this Code shall not apply to the non-members of the recognized collective
bargaining agent;

(f) To dismiss, discharge or otherwise prejudice or discriminate against an employee for
having given or being about to give testimony under this Code;

(g) To violate the duty to bargain collectively as prescribed by this Code;

(h) To pay negotiation or attorney’s fees to the union or its officers or agents as part of
the settlement of any issue in collective bargaining or any other dispute; [or]

(® To violate a collective bargaining agreement [.]; OR

() TO. DENY THE EXISTENCE OF EMPLOYER-EMPLOYEE
RELATIONSHIP AND/OR TO CLASSIFY AS CASUAL, CONTRACTUAL,
SUBCONTRACTED EMPLOYEES, AGENCY EMPLOYEES, OR OTHER
NON-REGULAR CLASSIFICATION THOSE EMPLOYEES WHO ARE
REGULAR EMPLOYEES BY VIRTUE OF ARTICLE 280 OF THIS CODE.

“The provisions of the preceding paragraph notwithstanding, only the officer and agents
of corporation, associations or partnership who have actually participated in, authorized
or ratified unfair labor practices shall be held criminally liable.”

SEC. 8. - Article 279 of the Labor Code is hereby amended to read as follows:

“ART. 279. Security of Tenure. ~ {In cases of regular employment, the employer shall not
terminate the services of an employee] ALL EMPLOYERS SHALL ENJOY SECURITY
OF TENURE AND SHALL NOT BE TERMINATED except for a just cause or when

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authorized by this Title. ALSO, THE RIGHT TO NOTICE IN EMPLOYMENT
RELATIONS REQUIRES ANY EMPLOYER WHO SEEK TO DISMISS A WORKER
TO FURNISH HIM A WRITTEN NOTICE STATING THE PARTICULAR ACTS
OR OMMISSIONS CONSTITUTING THE GROUNDS FOR HIS DISMISSAL. IN
CASES OF ABANDONMENT OF WORK, THE WRITTEN NOTICE SHALL BE
SERVED AT THE WORKERS’ LAST KNOWN ADDRESS. DUE PROCESS
ENTITLES THE WORKER AN OPPORTUNITY TO ANSWER THE
ALLEGATIONS STATED AGAINST HIM IN THE NOTICE OF DISMISSAL
WITHIN A PERIOD OF FIVE (5) CALENDAR DAYS FROM RECEIPT OF SUCH
NOTICE AND WITH THE ASSISTANCE OF A REPRESENTATIVE IF HE SO
DESIRES. THE RIGHT TO NOTICE REQUIRES THE EMPLOYER TO AFFORD
THE WORKER AMPLE OPPORTUNITY TO BE HEARD AND TO BE HEARD
AND TO DEFEND HIMSELF WITH THE ASSISTANCE OF HIS
REPRESENTATIVE IF HE SO DESIRES.

“An employee who is [unjustly] dismissed from work IN VIOLATION OF ANY OF HIS
RIGHTS UNDER THIS ARTICLE, INCLUDING THE RIGHT TO NOTICE AS
ELABORATED IN THE PRECEDING PARAGRAPH shall 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 compendation was withheld from him up to time of
his actual reinstatement.”

SEC. 9. — Article 280 of the Labor Code is hereby amended to read as follows:

“ART. 280. Regular and Casual Employment. ~ The provisions of written agreement to the
contrary notwithstanding and regardless of the 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 OR DIRECTLY RELATED TO 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 in nature and the employment is for the duration of the season].

“An employment shall be deemed to be casual if it is not USUALLY NECESSARY OR
DESIRABLE OR [covered by the preceding paragraph] RELATED TO THE USUAL
BUSINESS OF THE EMPLOYER: 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 IN and his
employment shall continue {while such activity exists] UNLESS HE IS TERMINATED
FOR A JUST CAUSE OR WHEN AUTHORIZED BY THIS TITLE.”

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SEC. 10. — A new Article 280-A is hereby inserted in the Labor Code to read as follows:

“ART. 280-A. PROJECT, EXTRA AND SEASONAL EMPLOYMENT. - PROJECT
EMPLOYMENT REFERS TO THAT WICH HAS BEEN FIXED FOR A SPECIFIC
PROJECT OR UNDERTAKING THE COMPLETION OR TERMINATION OF
WHICH HAS BEEN DETERMINED AND MADE KNOWN TO THE EMPLOYEE
AT THE TIME OF HIS ENGAGEMENT.

“EXTRA EMPLOYMENT REFERS TO ADDITIONAL WORK TO BE
PERFORMED IN RESTAURANT AND HOTEL ESTABLISHMENTS
SPECIFICALLY FOR BANQUET FUNCTIONS, SEMINARS AND SIMILAR
FUNCTIONS WHERE THE REGULAR EMPLOYEES CANNOT REASONABLY
COPE WITH THE INCREASED DEMANDS OF SUCH EVENTS.

“SEASONAL EMPLOYMENT REFERS TO THE PERFORMANCES OF
AGRICULTURAL WORK THAT IS SEASONAL IN NATURE AND THE
EMPLOYMENT IS FOR THE DURATION OF THE PLANTING OR HARVESTING
SEASON.

“PROJECT, EXTRA AND SEASONAL EMPLOYEES SHALL HAVE THE RIGHT
TO SECURITY OF TENURE AND ARE ENTITLED TO RESUME THEIR
EMPLOYMENT IN THE SAME OR SIMILAR POSITION UPON THE START OF
THE NEXT PROJECT OR OCCASION FOR EXTRA OR SEASONAL
EMPLOYMENT, AS THE CASE MAY BE: PROVIDED, THAT DURING THE TIME
THAT THEIR SERVICES ARE NOT ACTUALLY AVAILED OF, THEY SHALL BE
CONSIDERED TO BE ON AUTHORIZED LEAVE WITHOUT PAY.”

SEC. 11. A new Article 280-B is hereby inserted in the Labor Code to read as follows:

“ART. 280-B. PROHIBITION AGAINST FIXED TERM EMPLOYMENT. - NO
EMPLOYER SHALL HIRE ANY EMPLOYEE FOR A FIXED PERIOD, EXCEPT:
(1) PROJECT EMPLOYEES; (2) EXTRA EMPLOYEES; (3) SEASONAL
EMPLOYEES, (4) IN INDUSTRIES THAT ARE CERTIFIED BY THE PRESIDENT
IN AN EXECUTIVE ORDER, AS ALLOWABLE, DUE TO EXISTING AND
SUBSTANTIAL LOSSES IN THE INDUSTRY AS A WHOLE BROUGHT ABOUT
BY AN INABILITY TO PRICE GOODS COMPETITIVELY IN THE MARKET

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DESPITE RESORT TO ALL REASONABLE MEASURES; PROVIDED, THAT
SUCH CERTIFICATION SHALL BE FOR A PERIOD OF AT MOST THREE (3)
YEARS: PROVIDED FURTHER, THAT THE PRESIDENT MAY RENEW THE
CERTIFICATION UPON EXPIRY SHOULD THE CIRCUMSTANCES SUBSIT FOR
A SIMILAR PERIOD AND SUBJECT TO SIMILAR RENEWALS; (5) OVERSEAS
FILIPINO WORKERS; (6) THOSE HIRED TO PLAY PROFESSIONAL SPORTS;
(7) THOSE APPOINTED TO SENSITIVE POSITIONS IN EDUCATIONAL
INSTITUTIONS SUCH AS DEAN, ASSISTANT DEAN, PRINCIPAL AND
COLLEGE SECRETARY; AND (8) THOSE EMPLOED AS MEMBERS OF
MANAGERIAL STAFF, OTHER THAN THE FOREGOING EXCEPTIONS, ANY
STUIPULATION FIXING A PERIOD OF EMPLOYMENT SHALL BE VOID.”

SEC. 12. Article 280 of the Labor Code is hereby amended to read as follows

“ART. 281. Probationary Employment. ~ Probationary employment shall not exceed six
(6) months from the date the employee started working [unless it is covered by an
apprenticeship agreement stipulating a longer period]. The services of an employee who has
been engaged on a probationary basis may be terminated for a just cause or [when he fails}
UPON FAILURE 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, EVEN UNDER THE GUISE OF AN
EXTENSION, shall be considered a regular employee.”

THE TERMINATION OF PROBATIONARY EMPLOYEES SHALL NOT BE
VALID IF DONE TO PRECLUDE ACQUISITION OF SECURITY OF TENURE BY
THE EMPLOYEE. THE PRESENCE OF ANY OF THE FOLLOWIN'
CIRCUMSTANCES SHALL CREATE A REBUTTABLE PRESUMPTION OF THE
INTENT TO CIRCUMVENT THE RIGHT TO SECURITY OF TENURE OF
PROBATIONARY EMPLOYEES:

1. TERMINATION OF ALL OR ALMOST ALL OF THE PROBATIONARY
EMPLOYEES AT THE END OF THE PROBATIONARY PERIOD AND THE
SUBSEQUENT HIRING OF EMPLOYEES PERFORMING THE SAME WORK
OR TASK AND/OR OCCUPYING THE SAME POSITION AS THOSE
VACATED BY THE PREVIOUS PROBATIONARY EMPLOYEES.

2. MAINTAINING PROBATIONARY EMPLOYEES IN EXCESS OF THIRTY
PERCENT (30%) OF THE TOTAL WORKFORCE. HOWEVER, NEWLY-
CREATED COMPANIES/EMPLOYERS ARE EXEMPTED FROM OBSERVING


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THE FOREGOING PERCENTAGE RESTRICTION WITHIN ONE (1) YEAR
FROM THE START OF THEIR BUSINESS OPERATIONS.

SEC. £3. — Ardicte 266 of the Labor Code is hereby amended to read as follows:

“ART. 288, Penalties. — Except as otherwise provided in this Code, or unless the acts
compaimed of hinge on a question of interpretation or implementation of ambiguous
provisions of an existing collective bargaining agreement, any violation of the provisions
of this Code declared to be unlawful or penal in nature shall be punished with a fine of
not less than One Thousand Pesos (P1,000.00) nor more than Ten Thousand Pesos
(10,000.00) or imprisonment of not less than three months nor more than three years, or
both such fine and imprisonment at the discretion of the court.

“ANY PRINCIPAL OR SUBCONTRACTOR WHO ENGAGES IN LABOR ONLY
CONTRACTING AND/OR VIOLATES ARTICLES 106, 106-A, 106-B, 106-C, 106-
D AND 106-E SHALL BE SOLIDARILY LIABLE TO INDEMNIFY EACH
SUBCONTRACTED EMPLOYEE NOT LESS THAN FIFTY THOUSAND PESOS
(P50,000.00) WITHOUT PREJUDICE TO OTHER MONETARY AWARDS TO
WHICH SUCH SUBCONTRACTED EMPLOYEE MAY BE ENTITLED SUCH
AS BACKWAGES, MONETARY CLAIMS AND BENEFITS UNDER AN
APPLICABLE CERTIFIED BARGAINING AGREEMENT OR COMPANY
POLICY, WHETHER WRITTEN OR OTHERWISE.

“ANY EMPLOYER WHO DELIBERATELY CATEGORIZES OR OTHERWISE
TREATS REGULAR EMPLOYEES TO BE ANY NON-REGULAR EMPLOYEE
SHALL BE LIABLE TO INDEMNIFY EACH MISCLASSIFIED EMPLOYEE NO
LESS THAN FIFTY THOUSAND PESOS (P50,000.00) WITHOUT PREJUDICE
TO OTHER MONETARY AWARDS TO WHICH SUCH EMPLOYEE MAY BE
ENTITLED SUCH AS BACKWAGES, MONETARY CLAIMS AND BENEFITS
UNDER AN APPLICABLE CERTIFIED BARGAINING AGREEMENT.

“In addition to such penalty, any alien found guilty shall be summarily deported upon
completion of service of sentence.

“Any provision of law to the contrary notwithstanding, any criminal offense punished in

this Code, shall be under the concurrent jurisdiction of the Municipal or City Court’s and
Courts of First Instance.”

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SEC. 14. Implementing Rules and Regulations. - The Department of Labor and Employment
(DOLE) shall issue, within sixty (60) days after the effectivity of this Act, the rules and
regulations for its effective implementation,

SEC. 15. Separability Clause. — If for any reason, any section or provision of this Act is held
unscontitutional or invalid, the other sections or provisions hereof shall not be affected thereby
and shall continue to be in full force and effect.

SEC. 16. Repeating Clause. - All laws, decrees, executive orders, rules and regulations, or parts
thereof inconsistent with the provisions of this Act are hereby repealed or modified accordingly.

SEC. 17. Effectivity Clause. - This Act shall take effect fifteen (15) days after its publication in
the Official Gazette or in at least two (2) newspapers of general publications.

Approved,

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