JvlTH CONGRESS OF THE 
. ...t'UBLIC OF THE PHILIPPINES 
First Regular Session
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SENATE
S. No. 398
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■22 JUL12 PI 55
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INTRODUCED BY SENATOR JOSEPH VICTOR G. EJERCITO
AN ACT
STRENGTHENING THE SECURITY OF TENURE OF WORKERS IN THE PRIVATE 
SECTOR, AMENDING FOR THE PURPOSE ARTICLES 106, 107, 108<109,^AND 
294 OF PRESIDENTIAL DECREE NO. 442 OTHERWISE KNOWN AS THE LABOR 
CODE OF THE PHILIPPINES, AS AMENDED
EXPLANATORY NOTE
The Filipino workers deserve better.
The 1987 Constitution affords protection to labor and assures the right of workers 
to security of tenure. The long history of workers7 plight to attain this protected right 
paint their vulnerabilities and the inadequacy of State protection.
This proposed measure seeks to strengthen the security of tenure of workers in 
the private sector by absolutely prohibiting labor-only contracting and providing for stiffer 
penalties for violation thereof. These shall serve as deterrence for unscrupulous entities 
to take advantage of the vulnerable situation of the workforce.
To further protect workers7 right to security of tenure, the bill clarifies that 
regardless of employment status of an employee, his/her employment may only be 
terminated for a just or authorized causes. More so, it emphasizes that the expiration of 
service agreement between the principal and the contractor shall not be a valid cause for 
termination of employment.
Finally, this measure also defines legitimate contractualization and provides for


NINETEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session
SENATE
S. No. 3 98
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■22 JUL 12 PI 55
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INTRODUCED BY SENATOR JOSEPH VICTOR G. EJERCTTO
AN ACT
STRENGTHENING THE SECURITY OF TENURE OF WORKERS IN THE PRIVATE 
SECTOR, AMENDING FOR THE PURPOSE ARTICLES 106, 107, 108, 109, AND 
294 OF PRESIDENTIAL DECREE NO, 442 OTHERWISE KNOWN AS THE LABOR 
CODE OF THE PHILIPPINES, AS AMENDED
Be it enacted by the Senate and House of Representatives of the Phiiippines in Congress 
assembled:
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Section 1. Short Title. - This Act shail be known as the "Security of Tenure Act
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of 2022".
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Sec. 2. Article 106 of the Labor Code is hereby amended as follows:
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"Art. 106. [ContractoF—or subcontractor.] -
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LEGITIMATE CONTRACTOR. A LEGITIMATE
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CONTRACTOR REFERS TO ANY LICENSED PERSON
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OR ENTITY ENGAGED IN A LEGITIMATE
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CONTRACTING ARRANGEMENT PROVIDING
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SERVICES FOR A SPECIALIZED JOB OR
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UNDERTAKING UNDER A SERVICE AGREEMENT FOR
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A DEFINITE OR PREDETERMINED PERIOD,
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REGARDLESS SUCH WORK IS TO BE PERFORMED OR
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COMPLETED WITHIN OR OUTSIDE THE PREMISES


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OF THE PRINCIPAL.
THE SECRETARY OF LABOR AND 
EMPLOYMENT, BASED ON THE RECOMMENDATION 
OF THE NATIONAL TRIPARTITE INDUSTRIAL PEACE 
COUNCIL (NTIPC), UNDER ART. 290 (C) OF THE 
LABOR CODE, AS AMENDED, SHALL DETERMINE BY 
APPROPRIATE REGULATIONS SPECIFIC 
ACTIVITIES WHICH MAY BE CONTRACTED OUT.
Whenever an employer enters into a contract with 
another person for the performance of the former's work, 
the employees of the LEGITIMATE contractor [and of the 
lattcr-'s-subcontractor, if any,] shall be paid in accordance 
with the provisions of this Code.
In the event that the LEGITIMATE contractor [er 
subeontraeter] fails to pay the wages AND OTHER WAGE- 
RELATED BENEFITS of his employees in accordance with 
this Code, the employer shall be jointly and severally liable 
with his LEGITIMATE contractor [or subeontraeter] 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.
[The Secretary of Labor and Employment- mayr-by
appropriate regulations, restrict or prohibit the contracting-
out of labor to protcct-the-rights of workers-established
under this Code. In so prohibiting or-festricting, he-may
make—appropriate—distinctiofts—between—labor-only
contracting and job contracting as well as differentiations
within—these types of contracting and determine who
among- the parties involved shall bo considered the
employer for purposes of this Code, to prevent any-violation


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or circumvention of any provision of this Godo.]
[There is "labor-only'' contracting where thc-persen
supplying workers-to an employer docs not have substantral
capital-or--investment in thc--form of tools, GqulpnFient7
machineries/ work-premises, among others, and the
workers—recruited—and—placed—by—sueh—person—are
performing activities which are directly related to- the
principal business-of such employer. In such casesrt^
person or intermedtory 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 hirrb]"
Sec. 3. A new article. Article 106-A, is hereby inserted after Article 106, to read as
follows:
"ART. 106-A. CONDITIONS OF LEGITIMATE 
CONTRACTING. CONTRACTING ALLOWED UNDER 
THE PRECEDING ARTICLE SHALL BE DONE ONLY IF 
THE PERSON OR ENTITY ACTING AS CONTRACTOR 
OBTAINS A LICENSE FROM THE DEPARTMENT OF 
LABOR AND EMPLOYMENT (DOLE) AND ONLY IF IT 
PERFORMS A JOB, WORK, OR SERVICE IDENTIFIED 
BY THE SECRETARY OF LABOR AND EMPLOYMENT, 
BASED ON THE RECOMMENDATION OF THE 
NATIONAL TRIPARTITE INDUSTRIAL PEACE 
COUNCIL (NTIPC), UNDER ART. 290 (C) OF THE 
LABOR CODE, AS AMENDED.
SUCH LICENSE SHALL BE ISSUED AND 
MAINTAINED ONLY IF THE APPLICANT:
A. HAS A PAID-UP CAPITAL OF AT LEAST TEN 
MILLION PESOS (P10,000,000.00), WHICH


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MAY BE INCREASED BY THE SECRETARY OF 
LABOR AND EMPLOYMENT AS DEEMED 
APPROPRIATE THROUGH TRIPARTITE 
CONSULTATION;
B. ENGAGES IN AN IDENTIFIED SPECIALIZED 
JOB, WORK, OR SERVICE WHICH ARE NOT 
DIRECTLY RELATED TO THE MAIN BUSINESS 
OF THE PRINCIPAL;
C. FURNISHES A BOND UNDER ARTICLE 108 OF 
THIS CODE EQUAL TO TWENTY-FIVE 
PERCENT (25%) OF THE TOTAL CONTRACT 
COST; AND
D. PAYS A LICENSE FEE OF FIFTY THOUSAND 
PESOS (P50,000.00), WHICH MAY BE 
INCREASED BY THE SECRETARY OF LABOR 
AND EMPLOYMENT AS DEEMED 
APPROPRIATE THROUGH TRIPARTITE 
CONSULTATION;
THE LICENSE SHALL BE VALID FOR A PERIOD OF 
TWO (2) YEARS AND MAY BE RENEWED UPON 
COMPLIANCE WITH THE REQUIREMENTS 
PRESCRIBED AND OTHER REQUIREMENTS AS MAY 
BE DETERMINED BY THE DOLE. PROVIDED, THAT 
THE JOB, WORK, OR SERVICE TO BE PERFORMED 
CONTINUES TO BE DETERMINED BY THE 
SECRETARY OF LABOR AND EMPLOYMENT AS VALID 
FOR CONTRACTING, BASED ON THE 
RECOMMENDATION OF THE NATIONAL TRIPARTITE 
INDUSTRIAL PEACE COUNCIL (NTIPC)."
Sec. 4. Article 107 of the Labor Code is hereby deleted and replaced as follows:


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"ART. 107. ABSOLUTE PROHIBITION AGAINST 
LABOR-ONLY CONTRACTING. THERE IS LABOR- 
ONLY CONTRACTING WHEN THE CONTRACTOR 
MERELY RECRUITS, SUPPLIES, OR PLACES 
WORKERS TO PERFORM A JOB OR WORK FOR A 
PRINCIPAL.
LABOR-ONLY CONTRACTING, WHICH IS 
TOTALLY PROHIBITED, REFERS TO AN 
ARRANGEMENT WHERE:
1. a. THE CONTRACTOR DOES NOT HAVE 
SUBSTANTIAL CAPITAL, OR
b. THE CONTRACTOR DOES NOT HAVE
INVESTEMENTS IN THE FORM OF TOOLS, 
EQUIPMENT, 
MACHINERIES,
SUPERVISION, WORK PREMISES, 
AMONG OTHERS, AND
c. THE CONTRACTOR'S EMPLOYEES 
RECRUITED AND PLACED ARE 
PERFORMING ACTIVITIES WHICH ARE 
DIRECTLY RELATED TO THE MAIN 
BUSINESS OPERATION OF THE 
PRINCIPAL; OR
2. THE CONTRACTOR DOES NOT EXERCISE THE 
RIGHT TO CONTROL OVER THE 
PERFORMANCE OF THE WORK OF THE 
EMPLOYEE.
THE LICENSE OF THE CONTRACTOR ENGAGED 
IN LABOR-ONLY CONTRACTING SHALL BE 
REVOKED. IN ADDITION, A FINE OF FIVE MILLION 
PESOS (P5,000,000.00) SHALL BE IMPOSED.


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PROPRIETORS, PARTNERS, OFFICERS, AND/OR 
DIRECTORS DIRECTLY OR INDIRECTLY 
RESPONSIBLE FOR THE COMMISSION OF LABOR- 
ONLY CONTRACTING SHALL BE PROHIBITED FROM 
FURTHER ENGAGING IN THE BUSINESS OF 
CONTRACTING."
Sec. 5. Article 108 of the Labor Code is hereby amended as follows:
"Art. 108. Posting of bond. - [An employer or indirect 
employer may] THE PRINCIPAL SHALL require the 
contractor [or subcontractor] to furnish a bond [eqiiai-:te 
the cost of labor under contract] EQUAL TO TWENTY- 
FIVE PERCENT (25%) OF THE TOTAL CONTRACT 
COST, on condition that the bond will answer for the wages 
AND WAGE-RELATED BENEFITS due the employees 
should the contractor [or subcontractor, as the case may 
be,] fail to pay the same."
Sec. 6. Article 109 is hereby amended as follows:
"Art. 109. Solidary liability. The provisions of existing 
laws to the contrary notwithstanding, every PRINCIPAL 
[employer or- indirect employer] shall be held responsible 
with his contractor [or subcontractor] for any violation of 
any provision of this Code. For purposes of determining the 
extent of their civil liability under this Chapter, they shall be 
considered as direct employers."
Sec. 7. Article 294 of the Labor Code is hereby amended as follows:
"Art. 294. Security of tenure. [In cases of regular 
employment, the-employer shall not terminate] [t]The 
services of an employee, IRRESPECTIVE OF 
EMPLOYMENT STATUS OR POSITION, SHALL NOT BE
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TERMINATED except for a just cause or when authorized
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by this Title. An employee who is unjustly dismissed from
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work shall be entitled to reinstatement without loss of
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seniority rights and other privileges and to his/HER full
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backwages, Inclusive of allowances, and to his/HER other
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benefits or their monetary equivalent computed from the
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time his/HER compensation was withheld from him/HER
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up to the time of his actual reinstatement.
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THE MERE EXPIRATION OF THE SERVICE
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AGREEMENT UNDER ARTICLE 106 OF THIS CODE
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SHALL NOT BE DEEMED AS A TERMINATION OF
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EMPLOYMENT OF THE CONTRACTOR'S EMPLOYEES
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WHO ARE REGULAR EMPLOYEES OF THE LATTER.
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Sec. 8. Separability Cause. - If any portion or provision of this Act is declared
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unconstitutional, the remainder of this Act or any provisions not affected thereby shall
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remain in force and effect.
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Sec. 9. Repealing Cause. - Any law, presidential decree or issuance, executive
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order, letter of instruction, rule or regulation inconsistent with the provisions of this Act
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is hereby repealed or modified accordingly.
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Sec. 10. Effectivity. - This Act shall take effect fifteen (15) days after its publication
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in the Official Gazette or in a newspaper of general circulation.
Approved,