New DOLE policy bans ‘endo’

By Mayen Jaymalin (The Philippine Star), December 29, 2016

MANILA, Philippines – The practice of “endo” or end-of-contract is officially no longer allowed.

The Department of Labor and Employment (DOLE) yesterday issued a new regulation banning it and other “labor only” contracting practices.

Labor Secretary Silvestre Bello III said under the new DOLE Department Order, the old practice of manpower agencies and cooperatives of supplying only labor is now prohibited.

“Endo and ‘labor only’ contracting practices are the usual results of this old practice,” Bello noted.

Under the new order, Bello said terminating the service of a worker after the expiration of his service agreement with his employer is no longer allowed.

With the new policy, the DOH expects the regularization of more workers and the end to illegal contractual employment schemes.

“What we are envisioning is that assuming that we proceed with the contractual operations as provided by law, regular workers will continue to become regulars and those being outsourced by service provider will also attain the status of a regular employee,” Bello pointed out.

To ensure only legitimate contractors can engage in permissible contracting arrangements, DOLE has set higher capital requirements for such enterprises, from P3 million to P5 million.

A contractor shall also maintain a working capital requirement equivalent to 50 percent of the total salary of all employees to ensure workers shall be paid even if there are collection difficulties.

DOLE also requires contractors to post P100,000 cash bond and additional bond amounting to 50 percent of the salary of 10 percent of its employees.

Contractors must also provide financial assistance to employees waiting for new assignment, for a maximum of three months. If the three-month period lapses without the worker getting new employment, the contractor should give him or her separation pay.

Violators of the new DO face cancellation of registration as well as fines ranging from P10,000 to P50,000.

Bello said a copy of the new DO has been submitted to President Duterte for his guidance and approval.

The new DO authorizes the labor secretary to order the regularization of workers under certain conditions.

“This will significantly shorten the process of the regularization, which usually takes several years when pursued through the National Labor Relations Commission (NLRC),” Bello said.
He stressed that DOLE cannot repeal existing laws or totally prohibit all forms of contractualization.

“The present legal framework allows contracting activities for business flexibility, but business prerogatives must be balanced by providing adequate protection to the workers’ rights,” he explained.

He said the new DO ensures that workers in legitimate contracting arrangement can enjoy their right to security of tenure as well as just and humane working conditions.