House Endorses Bill to Ban Contractual Labor Practices for Private Companies

The House Committee on Labor and Employment endorses the immediate plenary approval of banning contractualization or contractual (endo) labor practices within the private sector in the Philippines. 

1PACMAN Party-List Representative Enrico Pineda, who chaired the House Panel, pushed the passage of House Bill (HB) No. 7036, also known as the Security of Tenure Act which prohibits labor-only contracting. 

The bill, however, allows the Secretary of the Department of Labor and Employment (DOLE) to make appropriate distinctions between labor-only contracting and legitimate job contracting. 

Under DOLE’s Department Order No. 174, labor-only contracting only exists when:

• The contractor does not have substantial capital or investment in the forms of tools, equipment, and machinery in the work premises; 
• The contractor has no control over the workers’ methods and means of accomplishing their work; and
• The contractor’s workers are performing activities which are directly related to the principal business of the employer.

HB No. 7036 provides for the licensing of job contractors and will penalize persons who practice without the required license. Administrative penalties such as fines or closure of business may be implemented to those who engage in end-of-contract arrangements and labor-only contracting. 

Pineda further stated that the bill mandates regular employment as a general rule and restricts “fixed-term” employment with the exemption in the cases of Overseas Filipino Workers (OFWs), workers on probation, and relievers on temporary replacement of absent employees. 

The bill seeks to ensure that the rights and benefits of non-regular employees are at par with regular employees.