Job contractor employer of contracted employees

Dear Pao,
I started working for a company six months ago under an agency. Eventually, the company absorbed me as their own employee. But instead of being their regular employee, the company placed me under probation as their probationary employee. Is my work designation correct because I have already worked for the company for 6 months? Am I not considered their regular employee?
Blessy

Dear Blessy,
Employment through contracting or subcontracting or usually known as employment through an agency, which is commonly practiced by companies, is valid. Contracting or subcontracting refers to an arrangement whereby a principal agrees to put out or farm out with a contractor or subcontractor the performance or completion of a specific job, work or service with a definite or predetermined period, regardless of whether such job, work or service is to be performed or completed within or outside the premises of the principal (Department Order No. 18-02, Series of 2002, Department of Labor and Employment).

An employer who enters into a contract with a contractor to perform work for the employer does not thereby create an employer-employee relationship between him and the employees of the contractor, the contractor being the true employer of said employees. However, if the contractor or agency is merely a “labor-only”, the person recruited is the employee of the company and not the contractor or agency since a person who is engaged in “labor-only” are mere agents of the employer and are therefore responsible to the employees in the same manner and extent as if the latter were directly employed by him (Article 106, Labor Code). There is “labor-only” if the contractor or subcontractor does not have substantial capital or investment which relates to the job, work or service to be performed and the employees recruited, supplied or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal or the contractor does not exercise the right to control over the performance of the work of the contractual employee (Department Order No. 18-02, Series of 2002, Department of Labor and Employment).

If the agency which recruited you to work for your present employer has substantial capital or investment which relates to your job, work or service to be performed and you are not performing activities which are not directly related to the main business or the agency exercises the right to control over the performance of your work, you are considered an employee of the agency. Thus, the company, as your new employer, has the right to offer you a probationary employment even if you have worked for them for the past 6 months considering that your employer for that period was the agency. However, if such agency is a mere “labor-only”, the company where you are presently employed has been your employer from your first day of work. Hence, you may be entitled to a regular employment status after working for 6 months if your work is usually necessary or desirable to the usual trade or business of the employer. If your status was probationary, you may also be entitled to regularization since a person who is required to work beyond the 6-month probationary employment acquires the status as a regular employee (Article 281, Labor Code).

Please be reminded that the above legal opinion is solely based on our appreciation of the problem that you have stated. The opinion may vary when other facts are elaborated. –PERSIDA ACOSTA, Manila Times

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to dearpao@manilatimes.net.