Lack of sanctions fuels job contracting

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Lack of sanctions against private companies found engaging in illegal job contracting is a reason why the practice remains prevalent in the country, Sen. Joseph Victor Ejercito said on Wednesday.

At an organizational meeting of the Senate Committee on Labor, Employment and Human Resources, labor officials admitted to senators that there are no penalties imposed on employers practicing illegal contracting or “endo” or labor-only contracting.

“Endo,” a colloquial term for “end of contract,” is a scheme wherein contractual employees are hired and fired every five months by employers.

It is a common practice among private companies to enable them to circumvent labor laws and deny workers regular employment and security of tenure.


Labor-only contracting, on the other hand, is an arrangement where the contractor or sub-contractor merely recruits, supplies or places workers to perform a job, work or service for a principal.

Ejercito during the hearing asked labor officials on sanctions and penalties imposed by the government on private companies caught practicing job contracting.

Director Benjo Benavidez of the Bureau of Labor Relations (BLR) of the Department of Labor and Employment (DOLE) told senators that at present there is no sanctions whether in the form of fine or criminal penalty imposed on employers practicing “endo” or job contracting.

“At most, the penalty is for the principal [employer]to regularize the workers and pay all wages,” Benavidez said.

He, however, clarified that the DOLE has identified three tracks that would deter the illegal practice while waiting for Congress to come up with remedial legislation.

Benvidez said the Labor department would enforce existing labor laws and review all existing implementing rules and regulations and the version of the security of tenure bill that seeks to amend certain provisions of the Labor Code.

Ejercito said he had filed Senate Bill 329 that seeks to strengthen the security of tenure of workers in the private sector and impose penalties on employers who would violate labor laws.

“But I recommend that we have to balance it out. We don’t want to be perceived as anti-business,” he added.

Sen. Joel Villanueva, the chairman of the committee, agreed with Ejercito on the need to come up with remedial legislation to come up with mechanisms including the imposition of sanctions.

He said while contractualization is a global practice, it does not tolerate putting workers under precarious conditions.

Villanueva added that Congress should come up with appropriate penalties that would not be disadvantageous to private companies to the point that they would be forced to shut down

“We want to make sure that we listen to all stakeholders and we wanted to get the best possible solutions regarding this issue,” he said.

Senate President Pro-Tempore Franklin Drilon said lawmakers and the officials of DOLE should think “out of the box” and come up with “win-win” solutions that would help the administration fulfill its promise of ending contractualization.

He added that while the law clearly prohibits labor-only contracting, the reality is that there is a high labor surplus in the country wherein there are fewer jobs than what the job market can accommodate.

That is the reason, Drilon said, why illegal labor-only contracting is widespread and, in order to solve the problem, the government should target the root cause of the problem–insufficient job opportunities.

“The companies tend to take advantage of skilled workers to hire them on a short-term basis and the workers, in the absence of job opportunities, would allow themselves to be exploited,” said Drilon, who served as Labor secretary under then-President Corazon Aquino.

He added that incentives be offered to companies that will prove to be effective in reducing the number of contractual employees in their payroll.

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2 Comments

  1. Juan T. Delacruz on

    Congress needs to make some amendments to the Labor Law, to mainly protect workers and allow them to form a union. This is one of the areas where they can strengthen the labor force, by giving the workers a bargaining tool, which will level the playing field.The lawmakers can define the parameters on all labor related issues, such as equality in labor force, discrimination practices in the labor force, and maybe add safe place to work and safe practices at work, especially in the areas where machineries are used for productions and so on.

    “END DO” practice will minimize the labor costs and maximize the profit of any company that is practicing this illegal employment method. They are maximizing their profits at the expense of the poor workers and the Congress should legislate a strong deterrence to eliminate this type of labor practice that have existed for so long. It is about time these lawmakers start doing something to protect the labor force.