Contractual Worker to get benefits, 13th month pay etc.

New Rule on Contractual Employment
Samuel P. Medenilla | Tempo, December 1, 2011

MANILA, Philippines – Amid the proliferation of companies outsourcing their services to contractors, the Department of Labor and Employment (DoLE) issued a new department order (DO), which will professionalize contractual workers.

Labor and Employment Secretary Rosalinda Baldoz said during a media forum Tuesday at DoLE’s head office in Manila at least 200,000 contractual workers from 2,624 contractors, subcontractors, and cooperatives will benefit from the new provision of Department Order No. 18-A, Series of 2011.

This will address the clamor of the labor sector to clarify government policy on contractual employment so that they could be assured this will not be used to circumvent the compliance of employers to labor standards - Sec. Rosalinda Baldoz said.

Under the DO No. 18-A, contractors, subcontractors and cooperatives are required to provide their workers with benefits similar to their regular counterparts. “The new D.O. will promote employment and encourage full compliance with minimum wages and general labor standards, including safe and healthful conditions of work, security of tenure, and self-organization and collective bargaining agreement,“ Baldoz said. It will also entitle them to social security benefits, which includes membership to SSS, Philhealth, and Pag-ibig.

The new order will also impose stricter requirements for contractors, subcontractors, and cooperatives to ensure only qualified companies will be able to operate. These include a P3 million paid capital to operate, possession of necessary tools and work prem ises to deliver their service, an employer-employee relationship with their workers, a PR25,000 registration fees, and the inclusion of a mandatory 10 percent administrative fee in their service contracts.

It will also require contractors, sub-contractors, and cooperatives to honor the full extent of the service contract with a company, which will prevent them from cutting the services of their workers in short periods per year. “These new provisions aim to weed out fly-by-night contractors and subcontractors. It will also end short term employment schemes like endo (end of contract) or 5-5-5 (five-month, fivemonth duration),“ Baldoz said.

She said the D.O. will become effective on Dec. 5, which is 15 days after it has been published in a national newspaper last Nov. 19. Companies, which will not be able to comply with these requirements, will have its licenses cancelled.