WHEN Department of Labor and Employment (DOLE) Secretary Silvestre Bello 3rd assumed office last year, he issued marching orders aimed at making the agency graft-free, upholding and protecting the rights of workers at all times and generating more job opportunities for the unemployed.
High on Bello’s priority list was putting an end to the illegal work contracting or end of contract (ENDO) practice – one of President Duterte’s campaign promises – of many establishments, including corporate giants, around the country.
“We have to stop ENDO, we have to stop contractualization. We have to help each other, both labor and management, and see how we can do this. We have to keep the balance,” the DOLE chief said even as he assured that no one would be spared from the campaign because said practice was against the law.
Contractualization, known as ENDO or “555,” is an arrangement whereby workers are only hired for five months and receive less than the mandated minimum wage without social protection benefits such as Social Security System (SSS), Pag-IBIG and PhilHealth. They don’t get paid for work overtime and on holidays and do not get non-cash benefits.
Companies go around the Labor Code by hiring the services of a recruitment or manpower agency or a cooperative to avoid a direct employer-employee relationship.
They then re-hire workers or renew contracts with the agency if employers still want to engage their services. Other employers create dummy manpower or recruitment agencies to avoid direct employee-employer relationship.
Department Order 174
Barely a year in office, Bello promised to stop illegal work contracting through Department Order (DO) 174 which replaced DO 18-A. It came into effect on April 3 and sets the implementing rules and guidelines on work contracting and sub-contracting.
Under DO 174, workers become regular employees under the labor contractors but the worker has no relationship with principal employers.
The order reaffirms the worker’s Constitutional and statutory right to security of tenure, applies to all parties in an arrangement where an employer-employee relationship exists and absolutely prohibits labor-only contracting. It also specifies other illicit forms of contractual employment arrangements.
DO 174 allows only permissible contracting and sub-contracting as defined; re-enforces the rights of workers to labor standards, self-organization, collective bargaining and security of tenure; and requires mandatory registration of contractors and sub-contractors and provides clear procedures for cancellation of registration.
However, organized labor said DO 174 was not what the President promised them.
Associated Labor Unions-Trade Congress of the Philippines (ALU-TUCP) said that DO 174 does not deliver on the President’s commitment to end all forms of contractualization.
“DO 174 just bans the already previously banned labor-only contracting and “cabo” system and does nothing to significantly advance the regularization of millions of contractual workers.”
’No sympathy for oligarchs’
During a Labor Day meeting, the President asked workers to draft an executive order (EO) that would put an end to abusive middlemen, contractualization work arrangements and for the return to the norm of direct hiring by principals and employers.
The President, the workers said, asked them to be patient and give him time to end contractualization. The draft EO was submitted to the President a week after the May 1 meeting.
During the meeting in Davao City, the President said, “I stand firm on my conviction to end Endo. Just give us time. The Labor Code guarantees all the right to security of tenure. This has to be strictly enforced. Labor laws must be enforced against Endo and labor-only contracting.”
The President admitted during the dialogue that there was “resistance and objections” coming from some members of his Cabinet and interest lobby groups on his decision to ban contractualization but said he has “no sympathy for oligarchs.”
Bello stressed that the DOLE could not implement or order a total ban on all forms of as the labor sector demands because only Congress can amend the law.
“We are not saying we are promoting contactualization. What we are saying is a total ban is not really viable because under existing laws there are contractual relations which are allowed,” he said.
Bello pointed out that the law allowed the outsourcing of workers if the company did not really need them in its operations as in the case of security guards and seasonal and project-based employees.
The DOLE chief also made true his earlier promise that no one would be spared from the anti-illegal work contracting campaign by going after corporate giants Philippine Airlines (PAL) and Philippine Long Distance Telephone Co. (PLDT).
PAL and PLDT were subjected recently to a Special Assessment/Visit Establishment (SAVE), DOLE’s mechanism to assess, validate and verify compliance with labor laws.
During inspection, violations were found in PLDT, mostly among its sub-contractors majority of which are not even registered or have expired registration, which prompted prompting Bello to order the regularization of close to 10,000 workers under contracting and sub-contracting arrangements “but are performing jobs that are directly related to PLDT’s business.”
As for PAL and PAL Express, including their contractors and sub-contractors, violations were noted on general labor standards and occupational safety and health standards and contractors’ workers are performing jobs directly related to the main business of the companies.
PLDT and PAL and sister company PAL Express have since assured the DOLE of full compliance with existing labor laws and regulations.
Regularizing more workers
“Objectively we can regularize 634,000 contractual workers and another 1.3 million non-regular workers or almost two million workers by 2022,” DOLE Undersecreary Joel Maglunsod told The Manila Times.
Maglunsod added that as per a report from the Bureau of Working Condition (BWC), a total of 49,393 workers have already been regularized by their employers during the first year of the Duterte administration through the intensified inspection of business establishment nationwide.
The senior labor official said, “Our projection is another 100,000 regular workers or even higher this year. It will continue to increase until the end of the President’s term in 2022.”
To complement the ranks of compliance officers now numbering 541, DOLE will hire 200 new Labor Laws Compliance Officers (LLCO), plantilla positions with an approved budget of P15 million from the Department of Budget and Management (DBM). The LLCOs conduct assessment and inspection of around 937,554 small, medium and big business establishments in the country.
Maglunsod expects the number of regularized workers to increase after the deputization of some members of labor groups, unions, and non-government organizations to augment the ranks of LLCOs particularly in areas with a high level of non-compliance.
But Maglunsod, a former labor leader, maintained that certain forms of work contracting allowed by law would continue unless amended by Congress.
“Even if we wanted to we cannot do it because of existing laws which allows certain forms of contractualization,” he said, pointing out that based on the Labor Code, the secretary of labor can only regulate work contracting and sub-contracting and prohibit labor only contracting but cannot prohibit them as such authority is vested in Congress.
“There is an existing law, which recognizes legitimate forms of contractual arrangements. We encourage the labor groups and NGOs to urge Congress and the President to certify as urgent House Bill 444 which prohibits all forms of contractualization,” Maglunsod added.
He urged companies, employers and all business establishments in the country to comply with general labor standards and occupational safety and health, as well as voluntarily regularize their contractual workers in accordance with DO 174.
Maglunsod also encouraged the public to call Hotline 1349 to enlighten them on their rights and report incidents of non-compliance by various establishments in the country.