Contractualization and security of tenure: Truths and falsities

By Ariel Nepomuceno, Businessmirror, Apr 5, 2017

WORKERS, young and old, organized and unorganized, woke up on March 16 and found out that Labor Secretary Silvestre H. Bello III finally issued Department Order (DO) 174, which totally bans labor-only contracting, halting “end of contract regimes” and providing mechanisms to strictly regulate various contractual arrangements. This latest issuance by the Department of Labor and Employment (DOLE) was reached after intensive and heated discussions and consultations with both labor and management sector. The issue is very critical, given that the Philippine Statistics Authority, in a fairly recent survey, advised that more than 1/3 in companies employing 20 people are, in fact, temporary workers.

DO 174 superseded DO 18-A and it basically outlaws the following: 1) Labor-only contracting; 2) Farming out work to a “Cabo” (persons or groups which supplies workers to an employer, with or without any monetary or other consideration, as an employer’s agent or as an “independent contractor”); 3) Contracting out of job or work through an in-house agency or an in-house cooperative; 4) Contracting out work by reason of a strike or lockout; 5) Contracting out work being performed by union members violating the latter’s right to self organization; 6) Requiring the contractors’ employees to perform functions which are currently being performed by the regular employees of the principal; and 7) Repeated hiring of employees under an employment contract of short duration plus other practices designed to circumvent the right of workers to security of tenure, among others.

The Labor Code has always recognized labor-only contracting and related DOLE rules as illegal because it is an arrangement that evades the duties and obligations of an employer. This is obviously contrary to public policy. In this sort of setup, a company or business outfit utilizes another entity, with no capital, investment, tools, premises or equipment, hires the people provided by the latter and makes them perform jobs which are core or directly linked to the business of such company but controls the work product of said workers. Wages, benefits and rights under existing labor standards and legislation are not the responsibility of the company but of the contractor or the group that supplies labor.

On the other hand, short-term hiring for less than six months, repeated rehiring of same workers after a brief period from manpower agencies and other analogous schemes are now frowned upon by the new DO simply because they are intended to thwart the regularization process, thereby denying rights that are associated with regularization. This set up is obviously antisecurity of tenure and, thus, the labor sector is vigorously opposing the same.

All in all, DO 174 looks, feels and appears to be a good law and is socialwelfare-driven. But both management and labor groups are not happy with it. Some employers and their organizations opine that the DO will result to loss of jobs, displacement of the laborers and will impact their right to avail themselves of contractual services, especially in areas where work is not essential or merely seasonal to its main operations. However, there is unanimity in the view that the issuance gives more clarity to what is legal contracting and strikes a balance between the need for competitive and inclusive growth vis-á-vis employees’ rights.

On the other side of the fence is the labor sector, which marked March 16 as a day of sadness and mourning in that the DO only reinforces the stronghold of capital over labor and the refusal of the government to end all kinds of contractualization. Groups, such as the Associated Labor Unions, Federation of Free Workers, Kilusang Mayo Uno, Ecumenical Institute for Labor Education and Research, Partido Manggagawa and the Migrante International denounced the order as antilabor and pro-capital because it merely reiterated the old principles under past DOLE administrative orders and did not put a definite end to short-term and agency-hired contracts. They called it modern-day slavery and will lead to a sordid situation where workers remain poor, trapped in inhuman working conditions, low pay and uncertainty in their economic future

Whatever criticisms this DO received and will receive, it is a clear effort to address the inequities brought about by employers who systematically do temporary hiring/illegal contracting, resort to unscrupulous agents or intermediaries to shirk from their duty to provide fair, humane and just conditions for people in the workplace. It enlarged and broadened the scope of illicit activities for which guilty individuals or corporations are going to be liable for. The DOLE also committed to strictly implement articles 106-109 of the Labor Code banning all contractualization activities that denigrate the lawful rights of our labor sector.

The rising inequality between labor and capital is a painful reality in a growing, globalized and aggressive capitalist world. Even Adam Smith, who was an advocate of a free and open market, mentioned that no society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable.

No glory in being rich when the ones who made you rich are mired in squalor.

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