Republic of the Philippines
House of Representatives

veh Regge

Quezon City fo? <4,

/ 3” RECEIVED.

Sixteenth Congress 2 |. 14N06 2013
First Regular Session i) ting: 220

Introduced by 1-BAP Party-list Representative Silvestre H. Bello III

EXPLANATORY NOTE

The Constitution recognizes and guarantees the employees’
right to security of tenure. A profession, trade or calling has been
defined as a property right within the meaning of this
constitutional guarantee and one cannot be deprived of the right
to work and the right to make a living because these rights are
property rights, the arbitrary and unwarranted deprivation of
which constitutes an actionable wrong.

The Labor Code of the Philippines, as amended, construes
security of tenure to mean that in cases of regular employment,
the employer shall not terminate the services of an employee
except for just cause or when authorized by the Labor Code.

However, the Constitutional and Labor Code guarantees
notwithstanding, workers are prevented from attaining regular
employment and security of tenure either by (a) firing them after
every 5 months then rehiring them for the same duration, or (b)
denying the existence of employer-employee relationships by
hiring them as “agency workers”, with the hiring and placement
agency as the purported employer, or (c) engaging them from
external manpower cooperatives whose members are farmed out
to industries for unlimited periods performing functions which are
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necessary and desirable to their main business without attaining
regular employment. These are the three most prevalent practices
which abrogate workers’ rights through CONTRACTUALIZATION.

That the attainment of security of tenure has remained
elusive to many of our countrymen because the unchecked
proliferation of the 3 described anti-worker practices have
continually served as roadblock calls for decisive action to rectify
that glaring gap in our present laws, so this proposed legislation
see to outlaw “contractualization” practices, provide penalties
for its violation, and finally place the constitutionally guaranteed
right to security of tenure within the reach of our toiling
countrymen,

Strong collective support from my fellow lawmakers for the
approval of this Bill is therefore earnestly sought.

Wes ello of

Representative, 1-BAP Party-list

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Republic of the Philippines
House of Representatives
Quezon City

Sixteenth Congress
First Regular Session

House Bill No.2419

Introduced by 1-BAP Party-list Representative Silvestre H. Bello III

AN ACT STRENGTHENING EMPLOYEES’ SECURITY OF TENURE,
AMENDING FOR THIS PURPOSE ARTICLES 106 AND 280 OF
PRESIDENTIAL DECREE NUMBER 442, OR THE LABOR CODE
OF THE PHILIPPINES BY ADDING ARTICLES 106-A ON
EXAMPLES OF LABOR-ONLY CONTRACTING PRACTICES;
ARTICLE 106-B ON THE EFFECT OF THE COMMISSION OF
LABOR-ONLY CONTRACTING; ADDING A LAST SENTENCE TO
ARTICLE 280 ON EMPLOYMENT DURING EXTRAORDINARY BUT
TEMPORARY SURGE IN DEMAND FOR PRODUCTS; NEW
PARAGRAPH 2 FOR ARTICLE 280 ON REGULAR EMPLOYMENT
FOR EMPLOYEES OF LABOR-ONLY CONTRACTING SCHEMES;
NEW PARAGRAPH 3 ARTICLE 280 ON SEASONAL EMPLOYEES
ACQUIRING REGULAR EMPLOYMENT STATUS IN CERTAIN
CONDITIONS; NEW ARTICLE 280-A ON EMPLOYEES ATTAINING
REGULAR EMPLOYMENT STATUS AS A RESULT OF REPEATED
REHIRING BY THE SAME EMPLOYER; NEW ARTICLE 280-B FOR

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ON-THE-JOB TRAINEES AND LEARNERS; AND DELETING THE
LAST SENTENCE OF THE 2? PARAPGRAPH OF ARTICLE 280,
ON A CASUAL EMPLOYMENT BECOMING REGULAR WITH
RESPECT TO THE ACTIVITY IN WHICH HE IS EMPLOYED
WHICH SHALL CONTINUE WHILE SUCH ACTIVITY EXISTS, AND
PROVIDING PENALTIES FOR THEIR VIOLATIONS,

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

SECTION 1. Short Title. - This Act shall be known as the
“Security of Tenure Act of 2013”

SECTION 2. Presidential Decree Number 442, or the Labor Code
of the Philippines, is hereby amended with the addition of the

following Articles, to read as follows:

ARTICLE 106-A. PROHIBITION ON LABOR-ONLY
CONTRACTING. - LABOR ONLY CONTRACTING IS HEREBY
DECLARED PROHIBITED.

FOR THIS PURPOSE, LABOR-ONLY CONTRACTING SHALL
INCLUDE ARRANGEMENTS WHERE:

(I) A MANPOWER AGENCY RECRUITS, HIRES AND
SUPPLIES OR PLACES ITS HIREES TO A PRINCIPAL

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OR INDUSTRY WHICH ACTUALLY PROVIDES THEM
THE JOBS, OR

(ll) A WORKERS’ COOPERATIVE ADMITS WORK
APPLICANTS TO BECOME ITS MEMBERS THEN
FARMS THEM OUT TO PRINCIPALS OR INDUSTRIES
WHICH ACTUALLY PROVIDES THEM THE JOBS,
AND

(Il) THE MANPOWER SO PLACED OR PROVIDED
PERFORM JOBS OR FUNCTIONS WHICH ARE
USUALLY NECESSARY AND DESIRABLE IN THE
MAIN BUSINESS ACTIVITY OF THE PRINCIPAL OR
INDUSTRY, OR

(IV) THE PERSONNEL OF THE PRINCIPAL OR INDUSTRY
TO WHERE THEY WERE PLACED EXERCISE
DIRECT CONTROL AND SUPERVISION ON THEM AS
REGARDS THE METHODS AND MEANS TO
PERFORM THE JOB AND IN ACHIEVING ITS
DESIRED RESULTS.

ARTICLE 106-B. IN ALL CASES WHERE LABOR-ONLY
CONTRACTING IS PRESENT, THE PRINCIPAL OR INDUSTRY
SHALL IPSO FACTO BE DEEMED THE DIRECT EMPLOYER OF
THE AFFECTED EMPLOYEES WHO WILL BE CONSIDERED
REGULAR EMPLOYEES RETROACTIVE TO THE DATE THEY

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WERE FIRST HIRED, AGREEMENTS TO THE CONTRARY
NOTWITHSTANDING.

SECTION 3. Article 280 of Presidential Decree Number 442, or
the Labor Code of the Philippines, is hereby amended with the
addition of the following phrase in Art. 280 (1), and sub-
paragraphs (2) and (3) to read as follows:

Art. 280 - Regular and casual employment.

(1)The provisions of written agreements 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, OR THE
EMPLOYMENT IS PURSUANT TO AN EXTRAORDINARY
BUT TEMPORARY SURGE IN DEMAND FOR THE
EMPLOYER’S PRODUCTS AND IS FOR THE DURATION OF
THE TEMPORARY SURGE.

(2) THIS SHALL INCLUDE EMPLOYEES WHO WERE HIRED
IN CIRCUMSTANCES DEEMED TO BE LABOR-ONLY

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CONTRACTING AS DEFINED IN ARTICLE 106-A AND 106-
B.

(3) SEASONAL EMPLOYEES, EXCEPT THOSE IN THE
CONSTRUCTION INDUSTRY, WHO HAVE BEEN HIRED
REPEATEDLY SHALL ACQUIRE SECURITY OF TENURE
AND CONSIDERED REGULAR FOR THE FUNCTIONS THEY
HAVE PERFORMED ON SEASONAL BASIS, PROVIDED
THAT THEY HAVE ATTAINED 12 MONTHS OF SERVICE,
WHETHER BROKEN OR CONTINUOUS, PROVIDED
FURTHER, THAT DURING OFF-SEASONS NOT
EXCEEDING 6 MONTHS, THEY SHALL BE CONSIDERED
ON AUTHORIZED LEAVE WITHOUT PAY, PROVIDED
FINALLY, THAT IN COMPUTING THEIR YEARS OF
SERVICE FOR RETIREMENT PURPOSES, THE OFF-
SEASON PERIODS WHERE THEIR SERVICES WERE NOT
AVAILED OF BY THE ESTABLISHMENT SHALL NOT BE
CONSIDERED.

SECTION 4. The second paragraph of Article 280 defining Casual
employment is shortened to delete the last phrase “with

respect_to_ the activity to which he is employed _and_his

employment_shall_continue while such activity exists.” The

paragraph shall now read as;

AN EMPLOYMENT SHALL BE DEEMED TO BE CASUAL IF
IT IS NOT COVERED BY THE PRECEDING PARAGRAPH:

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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.

SECTION 5. The following sub-articles are hereby added to
Article 280, to wit;

ART. 280- EXCEPT FOR PERSONNEL IN ACTIVITIES WHICH
ARE COVERED BY ALLOWABLE CONTRACTING
ARRANGEMENTS LIKE JANITORIAL, MESSENGERIAL AND
SECURITY GUARD SERVICES, EMPLOYEES WHO HAVE BEEN
HIRED REPEATEDLY BY THE SAME EMPLOYER TO EITHER
PERFORM THE SAME OR DIFFERENT JOBS SHALL BE
CONSIDERED REGULAR RETROACTIVE TO THE DATE THEY
ATTAINED THEIR SIXTH MONTH OF EMPLOYMENT, BROKEN
OR CONTINUOUS.

ART. 280-B - ON-THE-JOB TRAINEES, LEARNERS OR OTHER
FRESH ENTRANTS TO THE JOB MARKET WHO POSSESS NO
TECHNICAL SKILLS ARE EXEMPTED FROM THE BENEFITS
OF THIS PROVISION, PROVIDED THEIR TRAINING PERIODS
DO NOT EXCEED 12 MONTHS.

SECTION 6. Penalty provisions are hereby added as additional
sub-paragraphs with sub-sections to Article 280, to wit;

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ART. 280-C - PENALTY CLAUSE. - ESTABLISMENTS OR
EMPLOYERS FOUND VIOLATING THE FOREGOING SHALL BE
LIABLE TO THE FOLLOWING PENALTIES;

SECTION 1. PAY EACH AFFECTED EMPLOYEE AN
INDEMNITY OF PESOS TEN THOUSAND (PHP 10,000.00) FOR
EACH YEAR OF SERVICE WHERE THE EMPLOYEE WAS ON
CONTRACTUAL EMPLOYMENT;

A. FIRST OFFENSE - A FINE OF FROM A MINIMUM OF
PESOS FIFTY THOUSAND (PHP 50,000.00) TO A
MAXIMUM OF PESOS THREE HUNDRED THOUSAND
(PHP 300,000.00) DEPENDING ON THE EXTENT OF
VIOLATION IN TERMS OF EMPLOYEES AFFECTED.

B. SECOND OFFENSE - SUSPENSION OF BUSINESS
OPERATIONS FROM A MINIMUM OF ONE (1) WEEK TO A
MAXIMUM OF FOUR (4) WEEKS.

C. THIRD OFFENSE - INDEFINITE SUSPENSION OF
BUSINESS OPERATIONS,

SECTION 2. EMPLOYEES OF ESTABLISHMENTS WHICH
HAVE BEEN IMPOSED PENALTIES OF SUSPENSION OF
OPERATIONS SHALL BE CONSIDERED ON FULL PAY
WITHOUT LOSS OF BENEFITS DURING THE PENDENCY OF
THE SUSPENSION OF BUSINESS OPERATIONS OF THE

EMPLOYER.
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SECTION 3. SUPERSEDEAS BOND. IN ALL CASES
WHERE THE ESTABLISHMENT OR EMPLOYER FILES AN
APPEAL, THE APPEAL MAY BE GIVEN DUE COURSE ONLY
AFTER SUPERSEDEAS BONDS HAVE BEEN POSTED TO
GUARANTEE PAYMENT OF THE IMPOSABLE FINE AS WELL
AS EMPLOYEES’ INDEMNITY.

1.THE FILING OF AN APPEAL SHALL STAY THE
EXECUTION OF THE PENALTY OF SUSPENSION,
PROVIDED THAT SUCH FILING OF APPEAL SHALL
BE MADE IMMEDIATELY AFTER THE PENALTY OF
SUSPENSION HAS BEEN IMPOSED AND BEFORE
THE EFFECTIVE DATE OF ITS IMPOSITION,
OTHERWISE, THE APPEAL SHALL NO LONGER BE
TENABLE AND THE SUSPENSION SHALL BE
EXECUTED.

2. BEFORE IT MAY BE AUTHORIZED TO RESUME
BUSINESS OPERATIONS AFTER THE IMPOSITION
OF SUSPENSION UNDER SECTION 1B AND 1C, THE
ESTABLISHMENT MUST FIRST SHOW
SATISFACTORY PROOF OF PAYMENT OF BOTH
THE FINE AND THE EMPLOYEES’ INDEMNITY.

ART. 280-D - REWARD TO TIPSTERS - ANY PERSON OR
GROUP OF PERSONS WHO PROVIDE INFORMATION LEADING

TO THE SUCCESSFUL RECOVERY OF IMPOSABLE FINES
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ENUMERATED UNDER ART. 280-C SECTION 1 ABOVE SHALL
RECEIVE A REWARD OF FIFTY PERCENT (50%) OF THE FINE
RECOVERED, UP TO A MAXIMUM OF PESOS ONE HUNDRED
THOUSAND (PHP 100,000.00).

THE DEPARTMENT OF LABOR AND EMPLOYMENT
SHALL PROVIDE THE GUIDELINES AND MECHANISM FOR
THE PROPER HANDLING OF TIPS, THE INVESTIGATION OF
CASES ARISING FROM SUCH TIPS, AS WELL AS THE
CONFIDENTIAL HANDLING OF TIPSTERS’ IDENTITIES.

1. UPON RECEIPT OF A TIP OR REPORT, WHETHER
ANONYMOUS OR SIGNED, THE NEAREST REGIONAL OR
FIELD OFFICE OF THE DEPARTMENT OF LABOR AND
EMPLOYMENT BUREAU OF WORKING CONDITIONS
SHALL SEND ITS PERSONNEL TO VERIFY THE REPORT
AND INSPECT THE PREMISES INCLUDING THE
EMPLOYMENT RECORDS OF THE CONCERNED
ESTABLISHMENT.

2. IN HIS INSPECTION VISIT OF THE PREMISES, THE
LABOR INSPECTION OFFICER SHALL BE ACCOMPANIED
BY A REPRESENTATIVE OF THE EMPLOYEES’
ASSOCIATION OR EMPLOYEES’ UNION, AS THE CASE
MAY BE, AND SHALL INTERVIEW EMLOYEES SELECTED
AT RANDOM.

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3. AN INSPECTION REPORT SHALL IMMEDIATELY BE
SUBMITTED TO THE REGIONAL DIRECTOR OR FIELD
OFFICE HEAD WITHIN THE SAME DAY THAT THE
INSPECTION WAS MADE, OR THE FOLLOWING DAY AT
THE LATEST.

4, UPON RECEIPT OF A REPORT CONFIRMING THE
COMMISSION OF THE PROHIBITED ACTS ENUMERATED
AND DEFINED UNDER ARTICLE 106-A ABOVE, AND
AFTER BEING SATISFIED HIMSELF THAT SUCH
PROHIBITED ACTS ARE INDEED BEING COMMITTED,
THE CONCERNED FIELD OFFICE HEAD SHALL
RECOMMEND TO THE REGIONAL DIRECTOR WHO, OR
THE LATTER HIMSELF, AS THE CASE MAY BE, SHALL
FORTHWITH ISSUE WITHIN 3 CALENDAR DAYS A
NOTICE OF VIOLATION TO THE ERRING
ESTABLISHMENT.

5. THE NOTICE SHALL SPECIFY THE PROHIBITED ACTS
COMMITTED, THE IMPOSABLE PENALTIES THEREFOR,
AND THE DATE THAT THE PRESCRIBED PENALTIES
SHALL TAKE EFFECT, UNLESS THE ESTABLISHMENT
SUBMITS WITHIN 5 CALENDAR DAYS FROM RECEIPT A
VERIFIED EXPLANATION AND SHOWS CAUSE WHY THE
PENALTIES PRESCRIBED THEREIN SHALL NOT BE
IMPOSED ON HIM.

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SECTION 7. IMPLEMENTING RULES. The Department of
Labor and Employment shall, within 90 days from the
effectivity of this Act, issue the required implementing rules
and regulations for the efficient monitoring and

implementation of its provisions.

SECTION 8. REPEALING CLAUSE. - All laws, decrees, rules, and
regulations or parts thereof, which are contrary to or inconsistent
with the provisions of this Act are hereby repealed or modified
accordingly.

SECTION 9, SEPARABILITY CLAUSE. - If any part or provision
of this Act is declared unconstitutional, the remaining parts or
provisions not affected shall remain in full force and effect.

SECTION 10, EFFECTIVITY CLAUSE. - This Act shall take effect
fifteen (15) days from its publication in two (2) national

newspapers of general circulation after its approval by the
President.

Approved.

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