'Legal' contractualization

still allowed in new DOLE

order
Labor Secretary Silvestre Bello III says only Congress, not the Department of Labor and
Employment, can completely ban contractualization

Patty Pasion
@pattypasion
Published 3:30 PM, March 16, 2017
Updated 5:04 PM, March 16, 2017

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NEW ORDER. Labor Secretary Silvestre Bello III signs a new order that sets rules on labor contracting
and subcontracting. Photo by Ben Nabong/Rappler

MANILA, Philippines – Department of Labor and Employment (DOLE) Secretary

Silvestre Bello III on Thursday, March 16, signed a new order that sets stricter
guidelines for contractualization, but still left labor groups dismayed as they want all
forms of contractualization banned.

Through Department Order (DO) No. 174, series of 2017, the DOLE stressed that labor-
only contracting or the practice where the agency "merely recruits or supplies workers to
perform a job or work" for an employer is the form of contracting that is prohibited. In
labor-only contracting, the agency "does not have substantial capital or investment
which relates to the job, work or service to be performed."

DO 174 supersedes DO 18, which contained the original guidelines on contracting and
subcontracting.

To limit scrupulous labor agencies, the new order increases the substantial capital
requirement of manpower agencies to P5 million from P300,000. The DOLE also
shortened the validity of the certificate of registration of contractors from 3 to 2 years
and the registration fee was also increased from P25,000 to P100,000.
"Endo" or the "end of contract" scheme is also restricted by the new DO, as it prohibits
the continuous hiring of a manpower agency (contractor / subcontractor) of a worker
under a repeated contract of short duration.

Other prohibitions set by the new directive are:

 farming out of work through a "cabo" or a labor group

disguised as a labor organization or a cooperative
 contracting work from an in-house agency or an in-
house cooperative
 contracting work due to a strike or lockout
 contracting work performed by union leaders to ensure
employees' rights to self-organization
 requiring agency-hired employees to perform jobs that
are being done by regular employees of the principal
company
 requiring employees to sign a contract with a term
shorter than the agency's contract period with the
principal company

But despite the release of tougher guidelines, Bello said the key to limiting illegal
contractualization is through strict monitoring and implementation of the DO.

He has directed undersecretaries Joel Maglungsod and Bernard Olalia to review the
enforcement framework of the labor standards.

Bello also said he requested supplemental budget for an additional 200 labor
inspectors. Currently, there are only 535 labor law compliance inspectors monitoring
950,000 business establishments. Labor leaders will also be deputized by the
department to act as labor compliance inspectors.

"We have talked to the labor groups and they are willing. What we have to talk about is
we will deputize them but we will not pay them, like they will be rendering free work,
voluntary," he said.

The release of the order came after a series of talks with labor and management
groups. This order was originally set for release in December 2016.

'Bello resign'

Labor coalition Nagkaisa, however, said it will urge President Rodrigo Duterte to fire
Bello because the DO does not abide by the marching orders of the President.