Traders tackle job contracting

Companies determined to save on cost can adopt subcontracting but have to follow labor laws.

“They (companies) can outsource their non-core competencies to a subcontractor. This will translate to productivity, efficiency. Ultimately, it all boils down to savings,” said Ed F. Limtingco, vice president for membership of Cebu Chamber of Commerce and Industry (CCCI).

The CCCI, Philippine Economic Zone Authority and Berkeley Systems Management will hold the first industry forum on job contracting next week to educate 100 employers on the ins and outs of the process. Examples of jobs which companies can subcontract include security and janitorial services.

Under this arrangement, a company pays for the subcontractor to provide certain services.

Edward Mendez, Berkeley Systems president and CEO, said companies should check their subcontractors to ensure these are legitimate entities.

He explained that subcontracting is legitimate if the subcontractor has substantial capital or investment as well as the means to perform the job. The subcontractor should also ensure that contractual employees enjoy social and welfare benefits and security of tenure among others, Mendez added.

Limtingco also said many companies are unaware of the difference between legitimate subcontracting and labor-only contracting.

Department of Labor and Employment (DOLE) Order 18-2 prohibits labor-only contracting.

Under this practice, a subcontractor merely recruits, supplies or places workers to perform a job for the primary company called principal.

Lawyer Michelle G. Mendez-Palmares, president and general manager of Centurion Security Agency, Inc., said in this setup, the subcontractor doesn’t have substantial capital or investment to “actually perform the job, work or service.”

“In this case, the subcontractor only acts as a placement agency. In legitimate subcontracting, the principal is concerned only with the results of the services. The subcontractor is responsible for the means and methods,” said Mendez-Palmarez. She noted that like regular employees, subcontract employees are also entitled to minimum wages and benefits.

Some companies, however, violate this by paying salaries below the minimum wage and failing to submit remittances such Pag-IBIG and SSS (Social Security Systems). “Companies are often not aware of the legal consequences if they do not comply with the law,” she told reporters yesterday.

For instance, Palmares said each security guard should receive around P15,000 a month for an eight to 12-hour contract rate. Many only receive P10, 000 or below. Janitors, on the other hand, should at least receive the minimum wage rate of P267 daily for private employees in Metro Cebu.

Because some subcontract employees are not given the salaries and benefits due to them, they tend to resort to pilferage of office machines and supplies. “Pilferage is the number one problem of most companies in MEPZ (Mactan Economic Processing Zone),” Palmares said.–Cris Evert Lato, Cebu Daily News