Jesus R. Lapuz, Jr.

CURRENT SITUATION OF REPEATED HIRING AND DO 18-A

Alarming schemes and practices have surfaced in the business industry in recent
years, as far as state of the laborers are concerned: regular employment is increasingly
being replaced with contractual work through repetitive hiring of the employers under
short duration that prevents employees from being regularized thus preventing them
from availing of certain benefits otherwise given to regular ones.
It is believed that contractualization in the Philippines has been accelerating since
the early 1990s. On the employee side, it was reported that, from 14 to 15% between the
years 1990 1994, the share of contractual workers in enterprise-based employment had
jumped to 21.1% as far back as 1997. 1 On the employer side, in 2014, two out of three
Filipino firms utilized some form of non-regular employment, such as temporary, casual,
probationary, or contractual employment.2Under the law, contractual employees are
those who render services under a contract, which particularly stipulates the period of
employment and will not ripen into regular employment. Meanwhile, seasonal
employees are those engage to work during a particular season in an activity that is
usually necessary or desirable to the trade or business of employers. Although hiring on a
contractual basis is legally allowed, the Supreme Court, in a long line of cases, held that
contractual hiring becomes illegal and unconstitutional when the same employee is
repeatedly hired by the same employer and for the same purpose every after each
employment contract expires. Based on 2014 Integrated Survey on Labor and
Employment of the Philippine Statistics Authority on companies employing 20 or more
workers, 39 percent or 1.96 million of the total 5.06 million workers are non-regulars.
Statistics show that a total of 2.73 million people or 6.6 percent in the labor force are
unemployed while 2 in every 10 employed Filipinos are underemployed.3
One manifestation of how contractualization has become prevalent is that words
like Endo and 5-5-5 have seeped into the vernacular. Endo is the shortened version
of end of contract and is used to refer to the definitive end of contractual employment.
It is also used to refer to workers who work under such contracts. Meanwhile, under 51 This estimate excludes other forms of contractual labor arrangements like subcontracting, agency-hiring,
job-out, homework and other labor arrangement schemes which deny workers of security of tenure. See
Center for Womens Resources, The Life and Struggle of Women Workers under Contractualization, at 2,
Asia Pacific Research Network (Official Website), June 18, 2003, available at
http://www.aprnet.org/conferences-a-workshop/97-impact-of- globalization-on-women-labor/161-the-lifeand-struggle-of-women-workers-under-contractualization (last visited August 10, 2016).
2 Winfred Villamil & Joel Hernandez, Globalization, Labor Markets and Human Capital in the
Philippines, at 21, in 2 PRODUCTION NETWORKS, TRADE LIBERALIZATION, & INDUSTRIAL
ADJUSTMENT IN THE PHILIPPINES: INSTITUTIONS & POLICIES, available at
http://www.dlsu.edu.ph/research/centers/aki/_pdf/_concludedProjects/_volumeII/Villamilan
dHernandez.pdf (last visited August 10, 2016).
3 Ronalyn Olea & Janess Ellao, Workers Identify Contractualization as their Biggest Enemy. Bulatlat.com,
May 3, 2013, available at http://bulatlat.com/main/2013/05/03/workers-identify- contractualization-astheir-biggest-enemy(last visited August 10, 2016).

5-5, workers can only work for five months at a time, renewable for another two 5month contracts, after which they can work as open contract workers. 4 The limit is at five
months because under the Labor Code, an employee who is allowed to work after the
probationary period of six months shall be considered a regular employee and shall be
entitled to the rights and benefits accorded such workers.5
Last 14 November 2011, the Department of Labor & Employment (DOLE) issued
Department Order No. 18-A, Series of 2011 (DO 18-A) to alleviate the proliferation of
contractulaization and to further the delineate its legality. According to subsections 4 and
7 of Section 7 of DO 18-A, Contracting out of a job, work or service through an in-house
agency and Repeated hiring of employees under an agreement contract of short duration
or under a Service Agreement of short duration with the same or different contractors,
which circumvents the Labor Code provisions on Security of Tenure.6 The Department
Order further suggests that subcontracting is prohibited activity when it results to: (1) the
termination or reduction of regular employees and reduction of work hours or reduction
or splitting of the bargaining unit as provided in Section 7(A)[1]); and (2) unfair labor
practice (interfere with, restrain or coerce employees in the exercise of their rights to selforganization as provided in Article 248 (c) of the Labor Code, as amended) as provided in
Section 7(A)[6].
With a new administration which have been openly and aggressively pushing the end
of ENDO, The Department of Labor and Employment (DOLE) has taken the first step in
its campaign to end the practice of contractualization, popularly referred to as endo.
Department Order No. 162, series of 2016, issued by Labor Secretary Silvestre Bello and
which took effect last Monday, directs DOLE regional offices to stop accepting
applications from new third-party service providers. Only the 5,000 to 6,000 contractors
and subcontractors already registered with DOLE will now be allowed to operate. 7 All
certificates of registration of contractors/subcontractors issued prior to this Order shall be
respected, Bello said in the one-page order.8 This order will go after fly-by-night third
party service that most employers take advantage to circumvent the present law.
It must be noted that even though the push to eliminate ENDO have been as
aggressive as ever, there still has a lot of work to be done in coming up with a legislation
that would further the rights of the laborers enshrined in our constitution free of any
loopholes that employers may potentially exploit, yet again.

4 Abigail Malalis & Bobby Lagsa, Contractualization: The workers curse. PhilStar.com, Apr. 27, 2013,
available at http://www.sunstar.com.ph/cagayan-de-oro/local-news/2013/04/27/ contractualizationworkers-curse-279776 (last visited August 10, 2016).
5 See LABOR CODE, art. 287. This paper cites the Labor Code as renumbered pursuant to Rep. Act No.
10151 (2011), 5.
6 DOLE Dept Order No. 018-A-11 (2011).
7 Samuel Medenilla, Manila Bulletin, July 29, 2016, DOLE takes first step to end endo available at
http://www.mb.com.ph/dole-takes-first-step-to-end-endo/#tCbJLiMAhi6JtTY8.99(last visited August 10,
2016).
8 Id.

SWOT ANALYSIS
STRENGTHS

Expressly prohibits labor-only

contracting
Further delineates the existence of
Employee-Employer relationship

OPPORTUNITIES

some loopholes can be easily

remedied
further government involvement
may still be incorporated

WEAKNESSES

Ambiguity between the definition

of contractors and subcontractors
Lack of government participation

THREATS

susceptible to circumvention of
laws
loopholes that the perpetrators take
advantafe
employees are still not regularized
proliferation
of
fly-by-night
contractors and sub contractors