These days, the employers and employees inclined into job-contracting are significantly increasing. However, job contracting schemes cut both ways: the negative and the positive. The positive aspects of job contracting are outlined in House Bill No. 380, but when you look at the big picture, there are some issues that job contracting needs to address. For one, contractual workers are hired by agencies and with this scheme, some workers are underpaid and not getting the benefits due to them.
Contracting and Subcontracting
As defined by Department of Labor and Employment (DOLE), contracting or subcontracting is an arrangement where an employer (referred to as the principal) enters an agreement to farm out with a subcontractor or contractor a job’s completion. There is a predetermined or definite period for the completion of a specific job. In most cases, the service or work is completed within outside the principal’s premises.
“1) Minimum capitalization of at least P3 Million
• fully paid up capital for corporation, partnership and cooperative;
• net worth for single proprietorship
2) Proof of ownership or lease agreement on tools, equipment, machineries and work premises
3) Payment of P25,000.00 registration fee
4) Proof of financial capacity to pay the wages and benefits of its workers using the Net Financial Contracting Capacity (NFCC) formula in government procurement
5) Control over the performance of the work of the employee deployed or assigned to render the contracted work or services
6) Not engaged in labor-only contracting arrangement as provided in Section 6 Certificate of Bank Deposits
7) Not engaged in prohibited activities enumerated in Section 7
8) Observes the rights of the workers as provided in Section 8
9) Observes the required contracts under Section 9
10) Not delisted from the registry of legitimate contractor/subcontractor”
Contracting or subcontracting will only be legitimate if:
“a. the contractor or subcontractor carries on a distinct and independent business and undertakes to perform the job, work or service on its own account and under its own responsibility, according to its own manner and method, and free from the control and direction of the principal in all matters connected with the performance of the work except as to the results thereof;
b. the contractor or subcontractor has substantial capital or investment;
c. The agreement between the principal and the contractor or subcontractor assures the contractual employees entitlement to all occupational safety and health standards, free exercise of the right to self organization, security of tenure, and social and welfare benefits.”
The contractor’s employees are also entitled of the following:
“(a) safe and healthful working conditions;
(b) labor standards such as service incentive leave, rest days, overtime pay, holiday pay, 13th month pay, and separation pay as may be provided in the Service Agreement or under the Labor Code;
(c) retirement benefits under the SSS or
retirement plans of the contractor, if there are any;
(d) social security and welfare benefits;
(e) self-organization, collective bargaining and peaceful concerted activities; and
(f) security of tenure.”
If a worker feels that the contractor or subcontractor has violated the provisions of DO 18-A, they can file a complaint so the contractor’s registration will be cancelled. Complaint must be filed before the DOLE Regional Office.
