In the vernacular, contractual employment is usually called or referred to as “endo” or “5-5-5.”“Endo” is the shortened version of “end of contract,” which refers to employment that is only for a definitive short period of time.
On the other hand, “5-5-5” refers to an employment setup, under which one can only work for a five-month period and such contract may be renewed again for another period of five months. A “5-5-5”employment is also likened to a well-known sardines brand and implies that this canned food is the only thing that contractual employees can afford. This “555” scheme prevents the workers from acquiring security of tenure and corresponding benefits that regular employees usually enjoy.
In a recent attempt “to curb” contractualization in line with President Duterte’s campaign promise, the Department of Labor and Employment (DOLE) issued Department Order No. 174 on March 16 this year. That department order provides rules implementing Articles 106-109 of the Labor Code. In my opinion, DO No. 174 fails to adhere to President Duterte’s promise to totally abolish and prohibit contractualization. Rather, there are provisions in that department order that even imply that contractualization may be allowed, or seem to encourage the practice.
First, the Labor Code provides that “there is ‘labor-only’ contracting if 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 placed by such a person are performing activities that are directly related to the principal business of such employer.” Section 3(l) of DO No. 174 provides that “substantial capital” refers to paid-up capital stocks/shares of at least P5 million (P5,000,000) in the case of corporations, partnerships and cooperatives, and a net worth of at least P5 million in the case of single proprietorship. This is an upgrade from the previous P3-million requirement. Given the present time, this amount of capital can be easily raised by many businesses. Hence, the increase in substantial capital does not deter contractualization, making the implementing rules inutile. This does not prevent the proliferation of manpower agencies as long as these agencies are capable of putting up the required capital.
Second, the department order prohibits only “in-house” cooperatives, which refer to cooperatives that are “managed, or controlled directly or indirectly by the principal or one where the principal owns/represents any share of stock, and which operates solely or mainly for the principal.” Thus, there is no prohibition for other cooperatives to practice contracting and subcontracting.
Lastly, the department order bluntly provides in Section 8 instances of permissible contracting or subcontracting arrangements. This section automatically obliterates the guiding principle provided in Section 1, which states that “non-permissible forms of contracting and subcontracting arrangements undermine the Constitutional and statutory right to security of tenure of workers. Section 8, therefore, is a brutal disobedience to the presidential mandate to abolish all forms of contractualization.
During my law school days, our professors never fail to remind us of the concept of social justice. Social justice, in the words of Justice Laurel in Calalang vs Williams, means the “humanization of laws and the equalization of social and economic forces by the State so that justice in the rational and objectively secular conception may at least be approximated.” With all due respect to the Department of Labor and Employment, I think Department Order No. 174 does not promote social justice. The department order itself contains injustices for workers who toil for regular employment. I am hoping that one day, the concept of social justice will be in practice, and not just a mere concept or definition.
Allan Pamis is a legislative lawyer in the Office of the Senate President. He is also a licensed real estate broker and real estate appraiser. He earned his Political Science, M.B.A., and Law degrees from De La Salle University. He is currently enrolled in the DBA program of the same university. The views expressed above are the author’s and do not necessarily reflect the official position of DLSU, its faculty and administrators.