Finally, DOLE chief signs new order on contracting, subcontracting

Finally, DOLE chief signs new order on contracting, subcontracting

But says legislation needed to completely end contractualization

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MANILA, March 16, 2017 (PNA) — Labor Secretary Silvestre Bello III has signed a department order (DO) on contracting and subcontracting but emphasized that the Department of Labor and Employment (DOLE) has no power to prohibit all forms of contractualization and fixed employment.

“This matter is a function of legislation,” Bello said in a press conference today.

He said while he has quasi-legislative power, the Secretary of Labor “cannot, through rules and regulations, amend or supplant existing provisions of law (Labor Code).”

Bello said DO No. 174 will be useless if it will not be honestly and effectively enforced. “The Department would like to underscore… that a DO, however well-crafted, loses its utility and purpose if not well-implemented,” he said.

He said he has thus directed Undersecretaries Joel Maglungsod and Bernard Olalia to review the enforcement framework of labor laws and standards.

“Also, I have already requested the creation of 200 plantilla positions in addition to the existing pool of labor laws compliance officers. We will create regional inspection teams, to be supervised by Manglunsod and Olalia that directly report to the Office of the Secretary,” Bello said.

The new DO, which is the result of nine months of numerous dialogues and consultations with employers and workers, will take effect 15 days after its publication.

‘Long wait is over’
Bello III said the new DO “prohibits labor-only contracting and specifies other illicit forms of employment arrangements.”

“As one song goes, the wait is over. And yes, the long wait is indeed over. I have already signed the Department Order of Contracting and Subcontracting superseding DOLE Department Order No. 18-A,” Bello said in his speech.

Bello said the order “reaffirms the Constitutional and statutory right to security of tenure of workers” and “applies to all parties in an agreement where employer-employee relationship exists.”

He said the order “allows only permissible contracting and subcontracting as defined” and “re-enforces the rights of workers to labor standards, self-organization, and collective bargaining.”

He said the order re-enforces security of tenure, requires mandatory registration of contractors and subcontractors, and provides clear procedures for cancellation of registration.

Aside from labor-only contracting, DO 174 also bans the principal from the following:

  • engaging in “Cabo” (which refers to a person or groups of persons or to a labor group which, under the guise of a labor organization, cooperative or any entity, 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)
  • contracting out of job or work through an in-house agency
  • contracting out of job or work through an in-house cooperative which merely supplies workers to the principal
  • contracting out of a job or work by reason of a strike or lockout whether actual or imminent
  • contracting out of a job or work wing performed by union members and such will interfere with, restrain or coerce employees in the exercise of their rights to self-organization as provided in Article 259 of the Labor Code, as amended.

Likewise, the order prohibits requiring contractor’s/subcontractor’s employees to perform functions that are currently being performed by the regular employees of the principals.

It also prohibits requiring contractor’s/subcontractor’s employees 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 or welfare benefits, or a quitclaim releasing the principal or contractor from liability as to payment of future claims.

It also prohibits requiring employees to become members of a cooperative.

It also prevents repeated hiring by the contractor/subcontractor of employees under an employment contract of short duration; requiring employees under contracting/subcontracting arrangement to sign a contract fixing the period of employment to a term shorter than the term of the Service Agreement, unless the contract is divisible into phases for which substantially different skills are required and this is made known to the employee at the fine of engagement and such other practices, schemes or employment arrangements designed to circumvent the right of workers to security of tenure.

Bello said DO 174 has shortened the validity of the certificate of registration of contractors and subcontractors from three years to two years and it also increased the registration fee from P25,000 to P100,000. (Ferdinand G. Patinio/PNA)


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