ECoP: Labor contracting penalties ‘unconstitutional’

by Raynan F. Javil, Businessworld, May 30, 2017

THE security of tenure of workers is “not an absolute right,” the Employer’s Confederation of the Philippines (ECoP) said, noting that businesses also have a right to pursue a reasonable return on investment.

In a 15-page position paper on 25 measures pending at the House of Representatives, which all seek to strengthen the security of tenure of workers, the employers’ group cited jurisprudence in defending the industry’s right to pursue “expansion and growth.”

“Jurisprudence has reiterated time and again that the exercise of management prerogative is not subject to interference so long as it is done in good faith based on the exigencies of business and not intended to circumvent the legal rights of labor,” the ECoP said in its position paper submitted to the House committee on labor and employment.

A total of 25 versions of the measure are pending in the House panel, which seek to strengthen the security of tenure of employees by prohibiting the practice of labor contracting and promote regular employment.

“Security of tenure is not an absolute right. It cannot be pleaded to avoid the exercise of management prerogative. Such exercise becomes objectionable only when it is not for ‘reasonable returns on investments,’ and for ‘expansion and growth’ which are constitutionally recognized employer’s rights, but is sought merely as a convenient cover for oppression,” the employers group added.

The ECoP said that some of the 25 bills seek to “prohibit fixed-term employment” which is contrary to the established jurisprudence.

“Prohibiting fixed-period employment violates the freedom of contract of both parties who knowingly, willingly and without any moral pressure gave their consent to the execution of the contract guaranteed by the Constitution,” the ECoP said.

The group also said that job contracting is “invariably legitimate” as long as the right to contract out is motivated by good faith based upon the exigencies of business; not resorted to circumvent the law; or not the result of malicious or arbitrary action.

TUCP party-list Rep. Raymon Democrito C. Mendoza filed House Bill (HB) 4444, which prohibits all forms of contractualization and fixed-term employment.

However, the ECoP said that the proposal is “ultra vires and unconstitutional,” reiterating that it is the right of the employers to exercise an “inherent prerogative and its best business judgment to determine whether it should contract out performance of some if its work to independent contractors.”

HB 1208, filed by Bayan Muna Rep. Carlos Isagani T. Zarate, seeks a penalty of between P1 million and P10 million or imprisonment of at least six months for violators.

However, the ECoP said that the proposed penalties are “oppressive and unconstitutional.”

“Excessive fines especially if imposed on employers of micro establishments is violative of Section 19 of the Bill of Rights of the Constitution which prohibits the imposition of excessive fines,” the ECoP noted. Moreover, the ECoP said that provisions in some of the bills to allow contractual arrangements which are “not usually necessary or desirable, or directly related to the usual business of the principal” will result to prohibition of any form of contracting or outsourcing, because what is being contracted out is part of the work of the employer. —