By Catherine N. Pillas & David Cagahastian @davecaga
The Department of Trade and Industry (DTI) has put forward a scheme for companies to continue contractualization through service providers, but with the assurance of eventual regularization
for their workers.
Trade Secretary Ramon M. Lopez said this proposal, presented to business groups on Thursday by the DTI and the Department of Labor and Employment (DOLE), presents a middle-ground solution as opposed to total phasing out of contractualization.
“According to the Labor Code, a service provider is allowed to deploy workers. Our suggestion is to make them regular employees, not contractual. Our proposal is to make them direct-hire, permanent already. Once the contract of a particular worker in a company has expired, the service provider should redeploy that worker to another company,” Lopez said.
The practice of legitimate contracting or subcontracting, wherein the principal company farms out to a contractor a specific service or job within a definite period, is now being reviewed by the Dole, as the present administration aims to stamp out its abuse, dubbed as endo.
The so-called endo becomes a distortion of the legitimate contracting or subcontracting scheme when there is a repeated hiring of employees under an employment contract of short duration or a service agreement of short duration with the same or different contractors. This is done by principal employers to avoid paying more benefits to workers.
The prevailing Dole Department Administrative Order (DAO) covering the practice, the DAO 18-A,
Series of 2011, recognizes the workers hired by contractors or subcontractors as contractual employees.
With the proposal, the employee-employer relationship will now be implemented between the contractor (or service-provider) and the employee, with the contractor treating the employee as regular workers.
The contractor will be res-ponsible in giving full benefits to the workers, such as leave credits, retirement, SSS, Philhealth and others.
The principal, however, should have the responsibility to police the service providers, coupled with the DOLE’s tighter accreditation of the service providers.
Higher administrative fee
Employers Confederation of the Philippines (Ecop) President Donald Dee, in a phone interview, said they are open to the proposal, but this may mean the government may institute a larger fee for companies to pay to contracting, or subcontracting agencies.
Under the DOLE DAO 18-A, Series of 2011, there is a standard administrative fee of at least 10 percent of the total contract.
Dee estimates this can increase to 30 percent, given the increased liability of the subcontractors or contractors over the employees.
The Ecop president also noted that smaller companies may not be able to comply should a heftier fee be imposed and might just resort to direct hiring.
Lopez said President Duterte has been receptive to the idea, and the proposals will now be presented to labor groups to get their feedback.
“President Duterte is open to this system for service providers [contractors or subcontractors], but we have to ensure that the workers rights and benefits are protected,” he added.
Informal sector
But labor expert Rene Ofreneo said the government should not only focus on removing the illegal
practice of contractualization of Filipino workers, but should also work to protect and enforce the rights of those in the informal labor sector.
Ofreneo, a professor at the University of the Philippines’s School of Labor and Industrial Relations, said the government should also address the problems besetting the informal-labor sector, such as lack of social-security benefits and security of tenure, resulting in an overall feeling of anxiety over the future of their families.
The latest labor-force survey conducted by the Philippine Statistics Authority (PSA) in July indicated that 43.8 percent of the total Philippine work force are in the informal-labor sector, which is defined as those
workers employed in household or unincorporated enterprises owned and operated by own-
account workers.
“Under the Constitution, all workers have their constitutional rights to self-organization, collective bargaining and negotiations, security of tenure, humane conditions of work and to a living wage,” Ofreneo told the BusinessMirror.
“So the government should not only be preoccupied with eradicating contractualization for those employees in the formal-labor sector, but also for the millions of Filipinos in the informal sector,” he said.
Under the Labor Code, these workers in the informal-labor sector are excluded from many of the benefits extended to those in the formal-labor sector, such as the minimum labor standards for hours of work and salary rates for work done on weekends, and during legal and special holidays. This is aside from their right to security of tenure and other social-security benefits.
Labor law provisions, including the implementing rules, deprive these informal laborers of their constitutional rights under Article XIII of the 1987 Constitution. This is because even if these informal laborers are doing work that are usually necessary and desirable for the business of the employers who employ them on a more or less regular basis, their relationship with their employers are purported to be one where there is no actual employer-employee relationship, but mere contracts for a piece of work executed one after the other.
Ofreneo said it is not enough for the DOLE to repeal DAO 18-A, which allows a loophole for contractors to engage in legal contracting of laborers, but an overhaul of the Labor Code to provide equal protection not only between regular and nonregular workers, but also those in the formal- and informal-labor force.
Ofreneo cited the labor-relations situation in India, where even informal laborers are able to bargain collectively with their employers.
“In India they have an organization there composed of informal laborers, and they can bargain with their employer and lobby their government for housing benefits, education benefits and other social- protection benefits,” he said.