Order to protect labor in job contracting deals

THE LABOR department has revised the implementing rules and guidelines on job contracting and subcontracting arrangements in a bid to provide greater protection to workers.

Its Department Order (DO)18-A, signed on Nov. 14 and published in a newspaper on Saturday, will replace DO 18-02 which was issued in 2002.

A major change in the new DO is the addition of the capitalization requirement for contractors to be able to register at the Department of Labor and Employment (DoLE), Labor Secretary Rosalinda D. Baldoz said yesterday.

“Contractors will now be required to post P3 million paid capitalization before the DoLE can allow their registration,” she said in a telephone interview.

Asked how the amount was set, Ms. Baldoz said that it was based on the “consensus of the national Tripartite Industrial Peace Council together with the Philippine Association of Labor Subcontractors and other employers groups and labor groups.”

“Its background is that the capitalization should at least approximate with the cost of the service contract that they entered into, enough to pay the workers that they hired for the purpose of subcontracting.”

The DO reiterates the prohibition of labor-only contracting arrangement, Ms. Baldoz noted, whereby companies require employees sign five-month-only contracts to avoid paying employment benefits when the workers gain regular status.

Under the Labor Code, once an employee reaches six months in a company, the person automatically obtains regular position and is entitled to benefits.

Sought for comment former senator Ernesto F. Herrera, secretary-general of the Trade Union Congress of the Philippines, said the amended order will address concerns about labor management.

He said five-month contracting system and repeated subcontracting is rampant especially among department store sales personnel and workers in the garment industry.

The issue has been rumored to be the practice of major retailers but there has so far been no proof nor admission of such cases.

“What [department stores]do is that they hire laborers, make them sign five-month contracts to avoid these workers from becoming regular. That is illegal,” said the former chairman of the Senate committee on labor and employment.

In the garment industry, for example, he said many workers are merely rotated from one company to another without gaining regular status.

“Their work may be continuous but in several companies,” Mr. Herrera said, adding that such companies abuse their registration as local employment agencies.

“The main culprit here is the high level of unemployment in the country,” he said, explaining that if there are enough jobs for the unemployed, companies “would value their workers because it’s not easy to look for workers.”

He added that “the main program of the government [is to] increase employment opportunities.”

“The government can be the most effective intervenor here,” he said, explaining that employers are able to abuse workers because it is the workers themselves who initiate not to follow standards.

DO 18-A will take effect 15 days after its publication. — A. E. Barrameda, Businessworld